March 2010


And you learn that Hometown Democracy shifts many of the planning and zoning decisions from professionals that have spent a career working through the critical issues to all the voters. America was not founded as a Democracy with majority rule but as a Republic in which elected officials are selected by the people to study the issues and do what is best for their constituents.

The City of St. Pete Beach is the first city in Florida to select Hometown Democracy. It has been a nightmare. When individual voters are presented with potentially hundreds of referendums in each election cycle… nothing happens. The practice of “voting on everything” creates information overload. The result is exactly what the “Hometown Democracy” folks want to happen: no growth, no economic development & no new jobs. They have their own piece of paradise and they don’t want anything to happen in their backyard. They use the word democracy as a marketing buzzword and ask, “how dare someone not like Democracy? That’s like turning your back on motherhood and apple pie“.

Don’t let them distort the issues… please visit http://www.florida2010.org to learn more on this critical topic.

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Yesterday I spent an hour on a conference call with a national lender that is putting their money where there mouth is and has started to actively quote on income producing commercial real estate loans to be aggregated for a pool targeted to be securitized in Summer 2010.

Here are some of my notes on what Non-TALF CMBS will look like:

  • targeting stabilized assets in 5 major food groups
  • looking to keep things really clean (especially on the first securitization)
  • the loans will be primarily non-recourse
  • willing to get real creative for deals / sponsors they really like
  • been quoting deals from $5+ million
  • 5-10 year term
  • Amo: 25-30
  • Coupon: 6-6.5 for 5-years and 6.25-6.75 for 10-year money
  • lender is getting half point fee
  • sized to 11-12% debt yield
  • major markets with some secondary markets
  • non-recourse with some 25% recourse on special situations (large cash-out)

Also have a portfolio product:

  • portfolio 9-9.5% debt yield… might go to 9% if 20 year amo
  • Portfolio deals over $5mm
  • do credit check & litigation checks
  • want to understand the sponsor’s global real estate portfolio including debt maturities and cash flows
  • serious lenders with a balance sheet plan to retain the B-piece… market feedback is that there is no B-piece buyer support for loans under $10mm
  • Do bridge value add on multi-family because they can not compete with the Agencies (Fannie, Freddie & FHA)
  • Pre-payment penalty: they think defeasence with be the way it starts with possible yield maintenance option down the road
  • How do they work with brokers?: lender charges a half point when working with brokers – no more par loans
  • Lock box is likely required on $25mm and above not in the $5-20 mm range
  • Will do cash out deals for sponsors they like… if a lot of cash out will ask for partial recourse
  • Target initial pool to securitize is $400-500 mm
  • Will consider hospitality for clean, low leverage, good history properties