RER Financial Group LLC FDIC Special Asset Sales and CMBS Outlook GreenPearl Events – Distressed Real Estate Summit January 27, 2011 Christopher Kallivokas Chairman, RER Financial Group LLC [email_address] S T R I C T L Y P R I V A T E A N D C O N F I D E N T I A L RER Financial Group LLC
Loan Sales – These “Cash Auction Sales” are conducted over the internet by various FDIC contractors. As the name suggests, there is no financing provided. The product type generally involves performing and non-performing C&I loans, consumer loans and generally those loans not targeted for Structured Sales.
Real Estate Asset Sales – Single family, commercial and land assets that are held by the FDIC receiverships in title. Disposed of by FDIC contractors with information available on their respective websites.
Other Asset Sales - Mainly office furniture and other fixtures and equipment sold over the internet by FDIC contractors.
Structured Sales – Large and smaller pools of performing and non-performing Commercial Real Estate loans, Acquisition, Development and Construction loans and land loans offered through a competitive bid process with partial financing where the FDIC remains as a partner sharing in the upside.
Securitization Sales - These are large pools of performing single family loans aggregated from many failed institutions that are securitized and sold to institutional investor groups.
Awards and Contact Information for Owned Real Estate (ORE) Management & Marketing Services Contracts
The ORE Management & Marketing Services Contracts have been awarded to the contractors listed below:
Awards and Contact Information for Internet Marketing and Support Services Contractors
The “Cash Auction Sale” contracts have been awarded to the contractors listed below and the scope of work includes the marketing of assets, particularly loans of a diverse type, via an internet platform.
Are there any restrictions to purchasing loans from the FDIC?
Yes. The Purchaser Eligibility Certification identifies prospective purchasers who are not eligible to purchase assets from the FDIC under the laws, regulations and policies governing such sales. The FDIC must receive an executed Purchaser Eligibility Certification from the winning bidder upon notification of bid award.
In order to self screen, Potential Purchasers can review a sample copy of the Purchaser Eligibility Certification at the following link:
Structured Loan Sales Information 59.9% 35.4% Implied Value $218 Million $28 Million Partner Price Paid Colony Capital Turning Point Winning Bidder 1 to 1 1 to 1 Leverage 40% 50% % Equity Sold $1.8 Billion $314 Million Book Value 1,660 1,456 Number of Loans Non-Performing Non-Performing Loan Quality Commercial RE Single Family Loan Type 7/2/10 6/25/10 Date Sold CRE 2010-1 Venture LLC 2010-2 Multi-Bank SFR Venture LLC Sales ID
Leverage levels have risen from approximately 60 percent twelve months ago to as high as 75 percent today.
New issues increasingly feature properties with some level of risk—centers positioned in secondary or tertiary markets, complexes with near-term lease rollovers or higher than expected vacancy rates.
We are evolving from the initial conservative standards of early 2010 to more of a middle range A tertiary market can work if everything else about the deal is fine, or they’ll do lease-up risk if everything else about the deal is fine. We are not at the point where they’ll do everything, which is where we were at the peak of the market.
By the end of 2010, about a dozen or so firms had come back to doing CMBS issuance. As 2011 plays out, the number might swell to 25.
Most of new issuance money will go to finance new acquisitions or to refinance loans with low original leverage ratios. Borrowers looking to refinance where current LTV is thin will either have to put more money into their assets or look for mezzanine lenders to bridge the gap in funding.
Instead of “Cash Out Refinancing” it is “Cash In Refinancing”.
Good news - CMBS is still non-recourse but with tough prepay penalties.
It’s difficult for the new financing to take out the old financing. Property values have dropped. Things were very aggressively underwritten.
Refinance and acquisition owners are going to have to make a decision: contribute more equity into their properties or obtain mezzanine financing where possible.
Strong properties with good sponsors, stable rent roles and healthy LTV and DSC ratios will have many conduits fighting over them.