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Evaluating Today’s Financing Options

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Learn the best bets for finding commercial real estate financing in the current economic climate from top banking executives. Find out what historical trends can aid lending decisions and how trends …

Learn the best bets for finding commercial real estate financing in the current economic climate from top banking executives. Find out what historical trends can aid lending decisions and how trends in job growth, rail traffic, housing, and commercial real estate fundamentals impact banks and other lenders. Also learn how finance issues such as CMBS, cap rates, lending trends, and mortgage delinquencies affect the commercial real estate market.

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  • 1. Evaluating Today’s Financing Options
  • 2. Lending Options in Today’s Market Chris Christiansen Senior Vice President – Bank of America Merrill Lynch Global Commercial Bank Salt Lake City, UT 84111 801.526.5656 chris.christiansen@baml.com
  • 3. Real Estate Financing Options: •Life Companies •Bank Financing •Hard Money •Friends & Family Where does your property and / or borrower fit?
  • 4. Bank Financing Consists of 2Buckets: Bucket #1 Owner Occupied Properties Bucket #2 Non-Owner Occupied (Investor Properties) Typically funded by banks looking for a broader relationship Transactional relationship • Multi-purpose •Special Use •Single Tenant •Multi-Tenant •Mixed Use vs. Single Use What’s Important to a lender: 1. Property type 2. Strength of the borrower 3. Deal size A CRE Broker can add tremendous value by positioning the appropriate lender
  • 5. Sweet Spot: Owner Occupied Properties Loan Type Conventional Real Estate Loan SBA 504 Real Estate Loan (1) $250,000 – $15,000,000 $350,000-$13,750,000 Refinance, purchase and/or improvement of OOCRE • • • Construction Yes Yes Management Experience Prior industry management and ownership experience preferred Prior industry management and ownership experience preferred 20% 10-20% depending on property OOCRE 15, 20 or 25 years OOCRE up to 25 years Term 5, 7, 10, 15 or 20 years Up to 20 years Fees Negotiable Many eligible to be financed Rates Contact your Bank of America Merrill Lynch client manager or business development officer Contact your Bank of America Merrill Lynch client manager or business development officer May be applicable under certain fixed-rate options May be applicable under certain fixed-rate options Loan Size Use of Proceeds Down Payment Amortization Prepayment Fees total project costs Build, purchase or improve (OOCRE) Refinance of existing SBA 504 first deed of trust Equipment with usable life in excess of 10 years (e.g., printing press)
  • 6. Know your lender: •What is their sweet spot? •Deal size constraints / parameters? • Property type constraints •Concentrations? •Are they partial to certain industries? Bank of America Merrill Lynch •Owner Occupied / Investor Properties on a case by case basis •Single resource for SBA or Conventional financing for $250K to $15MM • Prefer multi-use but will finance some special-use properties •Industries: Manufacturing, Healthcare, Distribution, Professional Services Whether it’s pursuing co-marketing opportunities or developing quick, innovative financing solutions for your clients, you can depend on Bank of America Merrill Lynch to achieve your goals.
  • 7. Lending Options in Today’s Market Chris Christiansen Senior Vice President – Bank of America Merrill Lynch Global Commercial Bank Salt Lake City, UT 84111 801.526.5656 chris.christiansen@baml.com
  • 8. Thank you
  • 9. A Community Banker’s View on Lending Maryann Mize, CCIM Charlotte State Bank & Trust mmize@csbtfl.com
  • 10. Community Banks less than $10B represent 90%
  • 11. CRE Historic Basis: Communty Banks have had a role Commercial Real Estate Loans as a Percent of Total Assets 35.0% 30.0% Assets > $10 Billion Assets $1 Billion - $10 Billion 25.0% Assets $100 Million - $1 Billion Assets < $100 Million 20.0% 15.0% 10.0% 5.0% 0.0% Source: fdic.gov
  • 12. CRE Troubled Assets Overall is declining Noncurrent Assets Plus Other Real Estate Owned to Total Assets 4.50% 4.00% 3.50% Assets > $10 Billion Assets $1 Billion - $10 Billion 3.00% Assets $100 Million - $1 Billion Assets < $100 Million 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% Source: fdic.gov
  • 13. Overall: low Loan To Deposit Ratio’s means money to lend, includ ing CRE
  • 14. CRE Lending Overall is up since 2010
  • 15. A Community Banker’s View on Lending Maryann Mize, CCIM Charlotte State Bank & Trust mmize@csbtfl.com
  • 16. Questions?
  • 17. Evaluating Today’s Financing Options Thank you!

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