You inherit $25,000,000 and it has to be invested in Commercial Real Estate before the close of 2018; where do you invest?
LDCRE conducts a Roundtable discussion on the commercial real estate state of the market with three leading commercial real estate brokers, all of whom are all in the trenches every day. Nick Miner,CCIM is Senior Vice President at ORION Investment Real Estate, Sean Lyons is a Founding Partner at Triad Real Estate Partners, and Jeff Rowlett is a leading Investment Advisor at Marcus & Millichap serving private capital investors in Chicago, Milwaukee and nationwide. Continue reading LDCRE’s Roundtable Discussion on 2018 CRE State of the Market with Jeff Rowlett, Sean Lyons, and Nick Miner
Mike Marmis is the Managing Director of YAM Capital, a Commercial Real Estate bridge lender. YAM Capital is a privately held national lending firm based in Scottsdale, Arizona. It offers structured and funded bridge loans from $2M to $50MM and prides itself in expediency and certainty of execution. YAM Capital is part of American entrepreneur and philanthropist Bob Parson’s YAM Worldwide group of companies.
LD: What career path did you want to take when you were in college?
MM: My dad was in Real Estate Development so I was always interested in that industry, but I thought my career would take a bit of a different path and after Continue reading Spotlight Interview: Mike Marmis, Managing Director YAM Capital
Globe St recently put out a great article Economy, CRE Moving Beyond Headwinds that talked about the recent volatility in the stock market, which most experts are saying is being caused by the United States direct involvement with too many foreign countries that have a lot of ecumenic uncertainty (mainly China). The article was well written with research provided by FTI Consulting, a very reputable firm.
One thing the article didn’t reference is the growing demand for capital (debt) that will come due over the next 24 months. Nearly every commercial real estate deal is leveraged with some for of commercial debt so, investors are able to maximize their returns, maximize their buying power, and not out all their eggs in one basket.
In 2005 $169 Billion in CMBS was issued, in 2006 $202 Billion in CMBS was issued, and in 2007 $230 Billion in CMBS was issued all with the standard 10 year terms. That is a total of $601 Billion in CMBS debt that is set to mature 2015-2017. Granted some of these loans went into default and have since been resolved, there is still a bulk size of debt debt maturities scheduled to come up in 2016 and 2017. This doesn’t factor in new development deals or sales that are completely outside of these debt instruments.
What does that have to do with the value of Real Estate and Cap Rates? Well, the answer is simple the less debt there is available in the market place the more challenging it will be for buyers to pay a premium. It is estimated that the need for commercial debt will be larger than the the commercial debt supply. With an abundant supply of borers and deals it will be a lenders market, where they afford to raise their rates, lower their leverage, more detailed underwriting, and pass on more deals.
The projected constrains on debt in 2016 and 2017 will likely lead to more expensive debt and lower leverage, which will decrease investors yields- thus having a push to lower commercial values and increase cap rates.
The capital markets are healthy now and not constrained, so if you plan on selling in the next few years, now may be the best time, so you can avoid coming to market when a couple hundred million in CMBS matures and the debt markets get more crowded.
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