The Five Cs of Credit in the Apartment Building Mortgage Lending Business
“Loan underwriters often refer to the five Cs of credit when evaluating and underwriting loan applications. What are the five Cs and how do they affect mortgage lending on apartment properties? The five Cs are: capacity, capital, character, collateral and conditions. We will attempt to explain each of these items and their effect on apartment lending credit decisions.”
Source: The Five Cs of Credit in the Apartment Building Mortgage Lending Business
By Michael Stoler, Commercial Observer
(MARCH 28, 2014) The residential rental asset class is one of the most sought-after investments by purchasers of commercial real estate. Investors from around the world, including private equity funds, real estate investment trusts and established long-time owners of real estate, all want to own this asset class, especially if the property is located in New York City.
The purchasers and the owners of this property class have been fortunate that the majority of commercial and savings banks, as well as Fannie Mae, Freddie Mac and Wall Street firms providing CMBS financing, are all very interested in financing rental apartments.
via Multifamily Lenders Scramble For Business | Commercial Observer.
[JANUARY 15, 2014] Demand is up across the board as borrowers seek to buy debt back from special servicers; recapitalize properties; access capital for tenant improvements; or perhaps reestablish business plans for properties, notes Josh Zegen, managing member and co-founder of Madison Realty Capital in New York City. In addition, there is a healthy supply of “transitional” deals getting done for acquisition, rehab and new construction. Borrowers for those types of transactions often utilize bridge and mezzanine capital as a source of financing as they work to stabilize properties and improve NOI before going out and seeking permanent loans.
via Bridge, Mezzanine Lenders See Rising Tide of Deals | Bridge & Mezzanine Finance content from National Real Estate Investor.
In real estate, there are essentially three phases of development:
ground up construction
These phases represent the natural lifecycle of a real estate deal. Each sequential phase has its own set of work and therefore risk associated with it. In other words, the more phases a project must get through, the greater the risk but also the greater the potential for growth.
via The Fundrise Blog — Where’s the Risk? Understanding the Phases of Real Estate.
SECURITIES AND EXCHANGE COMMISSION
17 CFR Parts 230, 239 and 242
Release No. 33-9415; No. 34-69959; No. IA-3624; File No. S7-07-12
Eliminating the Prohibition Against General Solicitation and General Advertising in
Rule 506 and Rule 144A Offerings
“We are adopting amendments to Rule 506 of Regulation D and Rule 144A under the Securities Act of 1933 to implement Section 201(a) of the Jumpstart Our Business Startups Act. The amendment to Rule 506 permits an issuer to engage in general solicitation or general advertising in offering and selling securities pursuant to Rule 506, provided that all purchasers of the securities are accredited investors and the issuer takes reasonable steps to verify that such purchasers are accredited investors”
More info via SEC, Final Ruling
Originally posted by: Matt Krantz, USA TODAY 3:18 p.m. EDT October 23, 2013
Up until now, crowdfunding has just been a way for consumers to give money to inventors concocting newfangled things ranging from Big Wheel bikes for grown-up and smartphones. But soon, it could become a way to actually invest in those companies.The Securities and Exchange Commission voted unanimously to propose rules that, for the first time, would allow investors to buy stock in companies over the Internet using a crowdfunding exchange. These rules could reinvent the way that companies raise money by allowing them to bypass the traditional costs of going public, which usually involved hiring costly investment bankers and accountants.
via SEC moves toward allowing crowdfunding stock offerings.
On July 10, 2013, federal regulators adopted a rule lifting a ban on mortgage pool advertising. The ruling, allows hedge funds to advertise to the general public to offer their securities, once the issuer takes reasonable steps to verify that investors are accredited. The ban on mortgage pool general advertising has been in effect since 1933, during the Great Depression.
The ruling is welcome news for fund managers, because it increases their ability to attract capital. Experts agree that now is an opportune time to set up a mortgage pool. The lifting of the ban should take effect by mid-September 2013, allowing many private funds and companies to raise private capital under Rule 506 to advertise and solicit accredited investors in their Reg D offering.
via SEC Lifts Mortgage Pool Advertising Ban : Juniper Capital.