Highlands Garden Vilage Experience - Ron Tilton -- CNU 17

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Highlands Garden Vilage Experience - Ron Tilton -- CNU 17

  1. 1. CNU-Highlands Garden Village Ron Tilton, President FirstBank of Denver ph. (303)595-2403 June 12, 2009
  2. 2. “New Rules” <ul><li>Commercial Real Estate (CRE) Guidelines: 300% of Capital limitations are being enforced by regulators </li></ul><ul><li>CMBS Loan Maturities peaking in 2013 & 2014 and the impact on closure of this market </li></ul><ul><li>Future Inflationary Concerns will impact long term rates and available credit capacity </li></ul><ul><li>The credit culture & “over exuberance” during the last 10 years and the resulting losses, have pushed underwriting criteria back in time. </li></ul>
  3. 3. What’s In & What’s Out <ul><li>LTC & LTV…real cash equity is ‘in’; hybrid equity is ‘out’ (developer fee’s, market appreciation, lower cap rates, etc.) </li></ul><ul><li>Guarantors are ‘in’; non-recourse and limited recourse are ‘out’ </li></ul><ul><li>Real presales are ‘in’; spec or soft presales are ‘out’ (real buyers vs. the fog-a-mirror buyer with little money down & pre-qualified for a subprime loan) </li></ul><ul><li>Rate floors are ‘in’; LIBOR + 75 bp’s & Prime minus pricing with no floor is ‘out’ </li></ul><ul><li>Experienced/veteran development teams are ‘in’; inexperienced developers and contractors are ‘out’ </li></ul><ul><li>Horizontal & phased development is ‘in’; large vertical, single stroke development is ‘out’ </li></ul><ul><li>1.3 DSCR’s are ‘in’; projected lease up on increasing rent schedules is ‘out’ </li></ul><ul><li>Well located development sites near jobs & transportation is ‘in’; drive-til-you-can-afford-it is ‘out’ </li></ul><ul><li>Reasonable cap & vacancy rates are ‘in’; sub-6 cap rates & 5% vacancy rates are ‘out’ </li></ul>

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