Tag Archives: Joe Bleyle

phx-skyline

Seeing green: Bank roles shift in real estate market

Phoenix is a city of extremes, but lenders will see some balance in the market this year. There’s more capital flowing through the system than there was a year ago and, despite a slow recovery, Phoenix investors should find it easier to get loans in the market.

James DuMars, NorthMarq Capital

James DuMars, NorthMarq Capital

“This is an exceptional time to acquire financing for real estate,” says James DuMars, managing director of NorthMarq Capital. “The majority of lenders are planning to place more than they did in 2013 and offering competitive interest rates and terms. The properties look good as income trends are up over the past couple of years as are occupancy rates. The lenders still perceive upside to many of these projects because rental rates are still below where they were at the top of the cycle. It will be a busy year.”

NorthMarq is one of the largest privately held commercial mortgage banking companies in America and represents many life insurance companies. Recent policy changes have changed how life insurance companies reserve commercial loans, which DuMars says lowers reserves set aside for each loan.

“This means real estate loans will be more attractive going forward and more profitable,” he says.

Jim Pierson, principal at Legacy Capital Advisors, recently financed a deal in less than a month’s time — an acquisition deal that would typically take 45 to 60 days to complete. What made the deal even more interesting, he says, is it was for a value-add property that was less than 50 percent leased. Finding a non-recourse loan like that would have been unavailable a year ago, he adds.

Jim Pierson, Legacy Capital Advisors

Jim Pierson, Legacy Capital Advisors

“Phoenix has higher highs and lower lows than most places … The capital markets are virtually back in full swing,” says Pierson. “Lenders are originating loans in the 75 percent loan-to-value (LTV) range for commercial projects and 80 percent LTV for multi-family. During the boom, you could get a 10-year interest-only (IO) loan. Interest-only loan periods went away in 2009, but have come back into the picture. Borrowers can get a five-year IO loan at full leverage and full term IO for lower leverage deals.”

Pierson says his clients are actively purchasing real estate with longer term interest rates due to the sense “that rates cannot stay this low for too much longer.”

“From the lender’s perspective, the Phoenix MSA is a great place to lend money again,” says DuMars. “Lots of transactions are getting done. The perception of the lending community is that we are on the upswing in the cycle. We have positive job creation, a healthy housing market (with new construction), positive net in-migration and a lower unemployment rate than the national average.”

David Lodwick, Alliance Residential

David Lodwick, Alliance Residential

Alliance Residential CFO David Lodwick says several debt and equity companies that have previously focused on larger coastal markets are coming to Phoenix.

“Financing has become more institutional in nature as Phoenix has established a stronger national brand,” Lodwick says. “There is a significant demand for high-quality apartments, and it has been ideal to be involved in financing such a strong investment sector.”

Multi-family has dominated the commercial real estate market at $2B in sales in Phoenix, making it attractive to lenders. This continues to be the case. Multi-family has seen the most active financing in new construction financing and acquisition/refinances, Pierson says, adding that the next most active sectors are retail, office and industrial.

“We compete with all asset classes for capital and are seeing that competition increase as the market recovers,” Lodwick says. “The past few years of recovery was largely focused on multi-family, which has been great, but it is also great to see other commercial asset classes rebounding, as the related job growth is a strong driver for multifamily demand.”

Office vacancy dropped from 19.5 to 18.9 percent in the 1Q and home ownership is down to 65 percent, which has pushed people into multi-family living situations. Jones Lang LaSalle Vice President of multi-family sales and leasing Charles Steele adds that Fannie Mae and Freddie Mac have started to diminish loans put into the multi-family space by 10 percent every year.

“Significant policy changes have created additional guidelines and regulations that impact construction lenders, and have increased reporting requirements,” says Lodwick.

“With great partners, we are always able to work through these changes, but it has clearly changed the perspective of lenders. The policy changes will make it tougher for sponsors who do not have a strong track record and history to obtain construction debt. In addition, the permanent financing market — which provides much of the liquidity for the multifamily asset class through government-sponsored entities such as Fannie Mae and Freddie Mac — has been subject to much discussion on housing reform. We believe the success realized by the GSE’s multifamily finance capital will provide for future expansion.”

Joe Bleyle, Enterprise Bank & Trust

Joe Bleyle, Enterprise Bank & Trust

The industry is seeing the strongest improvement in industrial and hospitality markets. Well-located, anchored retail is slowly improving, says Joe Bleyle, senior vice president of Enterprise Bank & Trust.

“After enduring a number of false starts, most of our clients are cautiously optimistic that the commercial market is recovering,” Bleyle says. “While the rebound in residential prices has certainly been a positive dynamic for the Phoenix economy, commercial developers and investors want to see that translate into stronger permit numbers and job creation.”

Job creation, Bleyle adds, will improve office vacancy in particular.

“Lender appetite is strong for multi-family and industrial projects right now and nearly any commercial building that is owner-occupied by a stable company,” Bleyle says. “Financing is fairly difficult to obtain for investor office and almost non-existent for land.”

DuMars says lending is even across the board.

“With  the full return of the CMBS market we are very busy financing retail shopping centers that were held on the sidelines by the borrowers up until now,” he says. “Many owners have decided to refinance instead of sell now that they have the ability to pay off their maturing loans.”

“We’re starting to see investor interest in more traditional suburban projects in the southeast Valley,” adds Lodwick.

This interest is garnered by the high-wage jobs announced this year — from the Apple manufacturing facility to the Intel expansion.

“You’ve seen some of the capital partners recognize that and desire to be there to take part in that cycle,” he adds.

Recent policy changes within the CMBS and life insurance industry will make it easier for both lenders to be more active in 2014, DuMars said. Life companies, for example, may see the amount of reserves they held for real estate loans cut in half.

“Real estate debt is a preferred asset class by life insurance companies and institutional investors,” says DuMars. “Fear about pending maturities between 2015 and 2017 causing defaults has greatly abated.”

Brandon Harrington, Walker and Dunlop

Brandon Harrington, Walker & Dunlop

Rates are going to stay low in 2014 as CMBS becomes more aggressive and more banks are willing to lend, predicts Walker & Dunlop’s Brandon Harrington.

“I think 2014 is going to be a great year for borrowers — at least for the first quarter, potentially lower refinances and more deals,” he says.

Though life companies and CMBS can expect a better year in 2014, their struggles have changed the climate for bank financing.

The low cost of funds and weak demand for construction and bridge loans has made the industry more competitive among banks for term loans, says Bleyle.

“During the Great Recession, in 2009 and 2010, there was so little money out there that real estate in our space could be bought very attractively,” says STORE Capital CEO Chris Volk, who owns $2B in real estate and rents to 160 companies in 43 states. “In the wake of the Great Recession, there’s a gravitation to tenant quality. There’s a lot of activity that goes on in that space. In our spaces, the individual dollars, we gravitate toward smaller properties.”

“There’s a lot of capital, it’s just a matter of finding good deals to invest in,” says Harrington.

Joe Bleyle, WEB

Enterprise Bank Expands Arizona Commerical Real Estate Group

Enterprise Bank & Trust, the banking subsidiary of Enterprise Financial Services Corp announced that Joe Bleyle has been named senior vice president and director of commercial real estate lending for the Arizona region. Bleyle will lead an expanded effort to provide commercial real estate financing for mid-sized Arizona businesses, developers and investors.

Bleyle was formerly senior vice president responsible for managing the bank’s assets acquired as part of its FDIC-assisted acquisitions. He will continue to oversee the team managing those assets in addition to his new responsibilities.

Bleyle joined Enterprise in 2011 after serving in senior-level positions at Wells Fargo and First National Bank of Arizona. He previously served as chief financial officer for a local commercial real estate developer.

Bleyle holds an MBA and BS in Finance from the W.P. Carey School of Business at Arizona State University. He is a member of the Urban Land Institute and the NAIOP.

Joining Bleyle on the bank’s commercial real estate team is Ann McCartney, Senior Vice President, Private Banking. McCartney, who also joined the Bank in 2011, has an extensive background in banking and real estate. She previously held senior positions with Keystone Commercial Capital and First National Bank of Arizona among others. In addition to her new duties, McCartney will continue to serve as a private banker for Enterprise clients.

McCartney earned an MBA from the Thunderbird School of Global Management and a BS in Real Estate from Arizona State University. She has served on numerous industry and philanthropic boards and serves as an expert witness for commercial real estate disputes.

“With both banking and real estate industry experience, Bleyle is well-equipped for his new leadership role,” said Jack Barry, Chairman of Enterprise Bank & Trust’s Arizona region. “Along with Ann McCartney, this team has knowledge and expertise in Arizona’s commercial real estate industry. We look forward to increasing our involvement in this important sector.”