Michael Haltman, President Exeter Commercial LLC/Exeter Holding Ltd. 131 Jericho Turnpike, Suite 202 Jericho, New York 11753 516.338.7500
Commercial and Residential First Mortgage Note Sale Clarification
In the follow-on responses that I have received on our one Residential note in Cold Spring, New York (Putnam County) and our one Commercial note in Bronx, New York, it seems that our intentions may not be 100% clear.
Each of the notes has a principal amount of money that we have lent to the borrower, and each of the notes has an accrued interest portion that has accrued to date and continues to accrue at 24%. These are interest only construction loans, not conventional amortizing loans.
Our goal is to sell our 1st mortgage notes to an interested party, understanding that we will most likely not be getting 100% on the dollar, but that we will hopefully come to a price that would make a deal work for both parties.
Both of these loans are non-performing, and to reiterate both of these loans are construction loans and not conventional loans. They were made with a one year term, and are now well beyond that term.
On the SFR in Cold Spring, New York we are receiving a partial payment on a monthly basis of $6,000, with no guarantee that those funds will continue to be received.
I have attached the basic details again, but in summary
The home in Cold Spring is worth approximately $1.9 MM off of a recent appraisal, and we are owed in the neighborhood of $1.6 MM which includes principal of $875 K.
The commercial building in the Bronx is worth approximately $1.7 MM, is about 70% complete, and for a builder will require in the neighborhood of $400 K to finish once the foreclose process works through the system. We are owed $1.6 MM which includes $1.1 MM of principal and $400 K of accrued interest.
To reiterate, we are looking for bids on our 1st mortgage, I/O construction notes, and understand that we will not be selling them for 100% on the dollar.
More details on either note are available upon request.
I am the mortgage holder on an 80% completed, 16 unit building on Fairmont Place in the Bronx, New York.
There are 12 one bedroom units and 4 two bedroom units. The anticipated rent for the one bedrooms is $1,200 a month, and $1,450 for the two bedrooms for gross annual rents of $242,400 .
Because it is currently under construction we are valuing it on a times rent roll basis as opposed to net operating income, but we estimate the finished value to be between $1,700,000 and $2,000,000.
We are currently entertaining offers for our note, and are available to go over the details with any interested parties.
Michael Haltman, President Exeter Commercial LLC/Exeter Holding Ltd. 131 Jericho Turnpike, Suite 202 Jericho, New York 11753 516.338.7500
In this market, if you are still originating mortgage loans congratulations. This has been by far the most difficult market seen in a long, long time. That said, the key going forward is to have as much knowledge as you possibly can in order to differentiate yourself from the next mortgage broker. This also aloows you to work on every viable deal, without having to get someone else involved.
If you are an investor, these are the times that you wait for all of your career. As they say in the stock market, you want to be a buyer when all anyone else wants to do is sell.
The Commercial Capital Commercial Mortgage Training Program provides all this and more. It is 3-DVDs, 5.5 hours of pure training taught by nationally known commercial mortgage expert Charles Wallshein, Esq. In this program you will learn everything you need to know along the entire process. From the differences between residential and commercial mortgages, the analysis of a deal, how to determine if it is viable, how to present it to a lender, how to move through the underwriting process and most importantly how to overcome any obstacles and get it closed!
In addition to the DVDs, the program includes our 108-page Course Manual and Deal Analysis Spreadsheet.
We have sold over 500 copies of this program on our website for $295 (during better times of course), but are offering it on sale at Amazon.com this week for $89. If you think that you will ever have an interest in the commercial real estate market, buy this program NOW!
In these difficult times, Exeter Commercial LLC is happy to announce that we have closed a $4.375 MM Bridge Loan. While we have been closing smaller commercial mortgage deals on purchase and refinances of income producing property, larger, more complex deals are still possible to get done.
What Makes A Deal Possible In This Market?:
Good Collateral in the form of the subject building or property
A clear and concise executive summary of the proposed transaction. The project, the players, a source and use of funds, a pro-forma of the potential of the project, and exit strategy that is well defined plus any other information that will say to a lender:
"This is a good project with good borrowers, and I am comfortable in the fact that there is a strong and believable strategy for me to get my money back!!!
Good Borrowers or Co-signers
Good additional property that has equity to use as cross-collateral, or relevant cash on hand
All of the documentation provided in a timely fashion
A clearly defined exit strategy
Cash to bring to the deal or documentable cash already invested in the deal
For deals brought to us by brokers, direct contact with the borrower is a MUST!
In this environment there is no doubt that ground up construction deals are extremely difficult to get done, with condo deals that much more difficult than rental projects.The bottom line is that while credit is tight, it is available for worthy projects. At this time the phrase "it is who you know" has never rung more true. We are available to review any deals that you may have, and will be up-front and honest as to whether we feel it has merit, and more importantly if we feel it has a real chance to be funded.For deals above $25 MM, alternative methods of financing also exists.Our goal at Exeter Commercial is to always be conservative, and to over-deliver on our promises.
Michael Haltman, President Kunal Kohli, Vice President Exeter Commercial LLC 131 Jericho Turnpike, Suite 202 Jericho, New York 11753 516.338.7500
In these difficult times, Exeter Commercial LLC is happy to announce that we have closed a $4.375 MM Bridge Loan. While we have been closing smaller commercial mortgage deals on purchase and refinances of income producing property, larger, more complex deals are still possible to get done.
What Makes A Deal Possible In This Market?:
Good Collateral in the form of the subject building or property
A clear and concise executive summary of the proposed transaction. The project, the players, a source and use of funds, a pro-forma of the potential of the project, and exit strategy that is well defined plus any other information that will say to a lender:
"This is a good project with good borrowers, and I am comfortable in the fact that there is a strong and believable strategy for me to get my money back!!!
Good Borrowers or Co-signers
Good additional property that has equity to use as cross-collateral, or relevant cash on hand
All of the documentation provided in a timely fashion
A clearly defined exit strategy
Cash to bring to the deal or documentable cash already invested in the deal
For deals brought to us by brokers, direct contact with the borrower is a MUST!
In this environment there is no doubt that ground up construction deals are extremely difficult to get done, with condo deals that much more difficult than rental projects.The bottom line is that while credit is tight, it is available for worthy projects. At this time the phrase "it is who you know" has never rung more true. We are available to review any deals that you may have, and will be up-front and honest as to whether we feel it has merit, and more importantly if we feel it has a real chance to be funded.For deals above $25 MM, alternative methods of financing also exists.Our goal at Exeter Commercial is to always be conservative, and to over-deliver on our promises.
Michael Haltman, President Kunal Kohli, Vice President Exeter Commercial LLC 131 Jericho Turnpike, Suite 202 Jericho, New York 11753 516.338.7500
The FASB (Financial Accounting Standards Board)relaxed the rules that require a bank to mark the value of an asset on its books to a"market" price, <strong>IF</strong> a transaction that takes place is distressed and/or if the market that security trades in is inactive. This would probably describe pretty much every asset that is considered toxic, and that if marked to market would most likely cause a bank to become effectively insolvent.
These are complicated products that even the banks themselves, save for a few of the quants that created them, could either explain or describe. Products created with and about most every type of esoteric financial product available. Products with bid/ask spreads wide enough to drive a truck through. Products so illiquid that they may never trade and therefore can't be priced yet that allow the firms selling them to make huge money on them. You get the gist.
Now there also happens to be a Treasury plan that was recently created to let the private sector buy some of these assets off of the books of the bank in conjunction with the government at what is determined to be a market price. Before these mark to market rules were relaxed there was much concern that the bid/ask spread would never narrow enough for any of these assets to sell. Now that he banks can value them as they wish, it is pretty much a given that they won't sell.
The end result is that most of these assets will remain on the banks books, the banks capital positions will strengthen, earnings, at least in the near term will look good <strong>but the problem will still remain</strong>. Now some or even many of these assets will be fine, but the jury is out on the rest. The whole idea of removing them and replacing them with new capital that the banks can lend to you and me seems to be on hold. The banks will hopefully lend based on this new and improved capital position created by loosening mark to market, but what will happen if these positions really head south? Hmmmmm.
It all seems a little like hocus pocus.
Mark To Market: An Attempt At A Simple Example Of Trader Magic
Mark to market is a term that is getting thrown around all over the place: on Capital Hill, T.V., the newspapers, the internet and anywhere else the financial markets are covered. But what exactly is mark to market?
Back in the day, fresh out of B School, I was a municipal bond trader in a time when the most complicated product on the market were futures. Traders would use the firms capital to go out on "the street" and bid on bonds, buy them if they were the winning bid, put them into inventory and pray that the market would go
You would buy them "on the bid", and then "offer them out" at a higher price (i.e. pay $94 and try and sell them at $94 3/8). If you paid to much you would eventually have to sell them at a loss, get bailed out by the market or try and get the retail brokers to sell them to their clients (the thought was that retail would buy anything).
Now bonds have ratings (AAA down to junk or unrated), and although all bonds with the same rating are not worth the same, there is a ballpark value that you would use. There are strong AAA bonds and weaker AAA bonds, but if the "scale" for AAA revenue bonds due in 10 years was 5.10%, then the range might be 5.00% to 5.20%.
Now at the end of the day, you have to mark all of the bonds in your inventory to the market. But let's say the market has gone against you hard, and you are sitting with large losses. You have two choices. The first is to mark correctly, show the paper losses (because losses are not real until you realize them) and get called back to the head of the departments office for a spanking. You only seemed have to much inventory when the market went against you. The second choice is the hope and pray, where you mark your bonds higher than they should be, show a small loss or no loss at all, and hope and pray that the market bails you out.
Now in the hope and pray the firm really had paper losses that should have been recognized when figuring out the capital position, but did not know about them unless someone in management knew about the market and went through every traders books to make sure the marks were correct. Now multiply that situation by the massive numbers we are talking about today, and you can begin to see the scope of the problem.
Now the hope and pray would work until either the market rallied (good)or your positions got to old or "stale" and the department would force you to liquidate at which time you were screwed (bad).
Instead, take today's esoteric incredibly complex instruments that don't trade, that no one understand, are incredibly illiquid, may or may not be performing and that in no way can be valued effectively. Picture the bid/ask spread on those puppies. That is where we are today.
The information contained in this email and any attachments may be privileged and/or confidential and protected from disclosure. It is intended solely for the use of the recipient(s) to whom it is addressed, or an employee or agent responsible for delivering this message to the recipient(s). You are hereby notified that any dissemination, distribution, copying or other use of this communication is strictly prohibited. If you have received this communication in error, please notify the sender by reply email and delete this email and all attachments from your system. Thank you
If you don't get your daily free feed or email delivery of The Political and Financial Markets Commentator at http://politicsandfinance.blogspot.com, these are some of the stories that you have already missed in 2009:
From The Political and Financial Markets Commentator. Go to http://politicsandfinance.blogspot.com to sign-up for free email or feed delivery of new blogs
- Barack Obama names Mary Schapiro as new SEC head. She has strong experience at a time when the SEC has shown itself to be an ineffectual and anemic institution. Is she a good choice? Change and tough new leadership is what is needed, and maybe someone that has no axe to grind in the bureaucracy is a good choice.
Pawn Shop Bernie
- Anecdotal evidence of the impact of the Bernie Madoff scandal abounds. One is the increased traffic that is being seen at pawn shops in some of the nations ritziest areas. The Royal Pawn & Jewelry in Palm Springs has seen a large jump in inquiries since the event took place. On Long Island in New York, there is also rumors of a large volume of resignations from country clubs due to the scandal.
Thursday Market Action
- Crude tanks close to 10% closing at $36.18. As I have talked about here before what is good for us at the pump may be bad for us in the longer run as this drop indicates that there is absolutely no demand around the world for the commodity. The market took a late tank (no pun intended) today as General Electric was put on credit watch and President Bush expressed uncertainty as to whether the government would step in to provide money to the auto makers. Today is quadruple witching which will pump in a lot of volume and could create a lot of volatility.
"10 Outrageous Claims For 2009"
- Finally, Saxo Bank of Denmark has come out with a list of potential events for 2009 entitled "10 Outrageous Claims 2009." - CNBC It is a very interesting group.
An Iranian Revolution
Crude dropping to $25 a barrel
The S&P 500 falling to 500 (880 now)
Italy dropping the Euro
Australian dollar slumping versus the Yen
The Euro falling below $1.00
Chinese GDP growth falling to 0% (current estimates range from 6-10%)
Eastern European Forex Pegs to Fail
Sharp declines in commodities prices
Yen could become the Asian currency peg over the dollar
Many of these are forecasts that hopefully do not come true.
Quick question: Why is Bernie Madoff, apparently one of the biggest crooks of all time, doing house arrest with an ankle bracelet in his $7 million house when he couldn't make bail?
In a related story SEC Chairman Cox had this to say: the agency has found "no evidence of wrongdoing by any SEC personnel" in connection with Madoff's alleged $50 billion Ponzi scheme and that the SEC intends to get to the bottom of where it may have gone wrong. Is this guy kidding me? While he is at it he should find out where he went wrong alleviating the uptick rule.
OPEC Meets, OPEC Cuts Output, Crude Falls
In a meeting yesterday the OPEC ministers agreed to cut a record 2.2 million barrels of production a day from the market. This type of news at one point would have had the power to put fear into the trading pits and a tight squeeze into the crude shorts.
The announcement came as U.S. crude inventories rose more than expected which pushed the price of crude lower. Total motor gasoline inventories increased by 1.3 million barrels, compared to the 1.0 million barrel rise expected by analysts. And distillate fuel inventories increased by 2.9 million barrels, while analysts had expected an increase of 0.9 million barrels. This rise in inventories are in the face of sharp price declines that one would have assumed would drive demand up.
Where Do We Go From Here?
"Goldman, Once Warning of $200 Oil, Sees $45 in 2009", CNBC "Merrill Lynch Says Oil Could Fall to $25"
Any of this look at all familiar? Maybe if you rushed to lock in your heating oil for the winter at $4+ because the "experts" were forecasting crude above $200 a barrel. Like they forecast Google above $1000 and so on and so on. Ah the experts. Where would we be without them? We could go by the random walk theory or maybe just flip a coin.
There is no question that demand for the product is weak and may remain that way for sometime which is bullish for a decline in price. Maybe I am just a contrarian which I am. But what I do know from watching Wall Street analysts for oh these many years is that when the momentum is strong in one direction regardless of the product, and they begin to fall over each other trying to outdo price targets, it can be time to look in the other direction.
Not that this time these forecasts might not be right. They may be. But where is the Mea culpa from Goldman regarding the $200 call. The same place it will be if crude makes a beeline for $100. No accountability, the Wall Street way.
I did, however, just lock in my heating oil price.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
;)
;)
