Thread: New Format - Finance Symposium

Happy New Year Everyone. Since it's time to get back to work and figure out how to make 2012 a prosperous year, what better way to start than by creating an action plan, which is sure to include a visit to the Annual ISS Expo in Vegas.

This year ISS has reformatted the educational content a bit, and the new Finance Symposium will be THE can't miss session that will be bring you up to speed on all of the latest in financing and market conditions affecting your business. I am pleased to be moderating this session and will make sure that we cover all of the bases. We will have experts on hand that specialize in the core areas that you want to know about, including: David Smyle of Churchill to provide an update on the insurance financing markets; Devin Huber from BSC Group to update on Conduit and Bank Financing; Georgia Ragsdale from Best American Financial to update on all the changes and current news on SBA Financing; and Brock Andrus from 1st Service Solutions to provide detailed info and answer all of your questions about troubled loans and loan workouts.

We are also going to have an extended Q and A with the audience to make sure all of your questions get answered. If there any topics you would specifically like to see addressed, please feel free to post comments in this forum and I will personally make every effort to make sure those are addressed during the session.

So, get excited and book your trip, because this session is one you will not want to miss!!!

Sounds like a cool format, Shawn. Glad you're taking part.

How would you describe the outlook of the lending/credit market for this year? A little looser than in the past couple of years, or are lenders still demanding an arm and a leg down with little risk?

Originally Posted by jcarlisle

Sounds like a cool format, Shawn. Glad you're taking part.

How would you describe the outlook of the lending/credit market for this year? A little looser than in the past couple of years, or are lenders still demanding an arm and a leg down with little risk?

I think for the most part the lenders are geared up and ready to go, and are looking to put some dollars out the door and to work. That said, I think the credit side of the equation is very important right now and underwriting will be enforced fairly strenuously across the board. So bottom line looser from the perspective that capital is more readily available and becoming more so day by day, but not necessarily loose from the perspective of qualification, which is still a rigorous process.

John, I am going to focus my part of the presentation on updating the attendees on the developments in the CMBS market. I think come March, we will have a few more months of market stability under our belts, which will bode well for storage investors. 2011 proved to be a turbulent year for the CMBS market with volatility peaking during the summer months. Since then the market has behaved as close to normal as one can expect. With a few more months of stability, liquidity should continue to expand throughout 2012.

Looking forward to seeing everyone in Las Vegas in March.

Kind Regards,

Devin

Good stuff, Devin and Shawn.

Novice question: CMBS stands for "commercial mortgage-backed security," but aside from spelling out the abbreviation, a lot of folks get easily confused by this term, what it means and why it's important. For the commercial real-estate newbies out there, could you spell out the basics of CMBS?

There has been a lot of interest in using SBA 504 and 7a for self-storage acquisition and refinance. This is a great new funding source especially for smaller owner/operators who need higher leverage. Bring your scenarios and questions for this topic as well.

John I am going to steal the technical definition from the Mortgage Bankers Association below and then at the bottom are some VERY GENERAL parameters a borrower can expect as of January 11, 2012.

-------------------------------------------------------------------------------------
The following is a descriptive passage from the "Borrower Guide to CMBS" published by the Commercial Mortgage Securities Association and the Mortgage Banker's Association:

Commercial real estate first mortgage debt is generally broken down into two basic categories: (1) loans to be securitized ("CMBS loans") and (2) portfolio loans. Portfolio loans are originated by a lender and held on its balance sheet through maturity.

In a CMBS transaction, many single mortgage loans of varying size, property type and location are pooled and transferred to a trust. The trust issues a series of bonds that may vary in yield, duration and payment priority. Nationally recognized rating agencies then assign credit ratings to the various bond classes ranging from investment grade (AAA/Aaa through BBB-/Baa3) to below investment grade (BB+/Ba1 through B-/B3) and an unrated class which is subordinate to the lowest rated bond class. The bonds are then sold to investors
-------------------------------------------------------------------------------------

Terms that one can expect to achieve in the current market are as follows:

LTV - 65% - 70% in rare circumstances 70% - 75%
Rate - Corresponding Swap index plus 325 bps to 375 bps (currently in the mid to high 5% range)
Term - 5, 7 or 10 years
Amortization - 20 to 30 years
Non Recourse (subject to typical carve outs)
Cash Management
Escrow for Ins. and Taxes
Cap Ex. Reserve - typically 10 to 20 cents per square foot
Fees - 25,000 to 40,000
Top 200 MSA
Stabilized cashflow
Minimum loan amount 3MM
Prepayment - Defeasence or Yield maintainence

Devin S. Huber
Principal
The BSC Group
O: 312-207-8232

dhuber@thebscgroup.com
www.thebscgroup.com


The BSC Group was named 2011 Best of Business - Finance
by the readers of Inside Self-Storage.