Debt Availability Emerges as Key Funding Variable

Chicago, IL -- (ReleaseWire) -- 01/27/2009 -- Starting more than a year ago, dramatic repricing of mortgage markets still leads to a downward spiral of property values of which the full impact is yet to be felt. Lenders and buyers alike are trying to understand new pricing realities based on more conservative mortgage underwriting. Furthermore, given today's unpredictable markets, lenders seldom rely upon any current sales transactions for appraisal purposes. Most properties sold prior to the mortgage market meltdown are based on metrics using more favorable mortgage terms and leverage not available now.

While many investors are uncertain how to price properties based on current leverage, the following underwriting benchmarks are currently in favor with the funding community:

• Actual Cash Flow: Current cash flow is mandatory. Three years operating history preferred, if available. Projects with deferred cash flow require additional collateral and/or recourse.
• Properties: Gravitating toward conventional property types (apartment, industrial, office and retail). Properties with too much "story" avoided as risk aversion prevails.
• Valuation: Cap rates priced 50 basis points or more above more over mortgage constant
• Leverage: 65% or less loan-to-value for commercial properties; 75% for apartments
• Debt Coverage: 125% debt service coverage or more for conventional properties (apartment, industrial, office and retail); 140% or higher for special-purpose.
• Guarantees: Life companies continue providing non-recourse debt. Full recourse required as well as deposit relationships with banks and most other financial institutions.
• Sponsorship: Seasoned borrowers with established track records sought. Qualified borrowers typically normally support net worth statements equaling the loan amount. Liquidity test of 25%+/- desired.

Observation:

As strange as it sounds, pricing is not mentioned above. The availability of funds is the most important criteria above all else. In fact, a standard contingency in most purchase contracts today is buyers to prove to sellers that reliable financing is in place. Buyers need to specifically disclose their funding source and provide reasonable proof that loan proceeds are available at closing.

ABOUT US:

The Real Estate Capital Institute® is a volunteer-based research organization that tracks realty rates data for debt and equity yields. The Institute posts daily and historical benchmark rates including treasuries, bank prime and LIBOR. Furthermore, call the Real Estate Capital RateLine at 7RE-CAPITAL (773-227-4825) for hourly rate updates.

For more information on this press release visit: http://www.releasewire.com/press-releases/release-3.htm

Affordable Housing Expert Widens Institute’s Research Capabilities

Chicago, IL -- (ReleaseWire) -- 01/22/2009 -- The Real Estate Capital Institute® added the seasoned realty industry veteran, Randal Dawson, to its Editorial Advisory Group for 2009. Mr. Dawson is a Senior Vice President with CB Richard Ellis. He specializes in the market analysis/valuation of affordable housing and low-income housing tax credits.

Randal is also a Member of the Appraisal Institute (MAI) and is a Certified General Appraiser in 17 states, with a national specialty practice in affordable housing and low-income housing tax credits. Mr. Dawson serves on the Appraisal Institute's-National Publication Committee as a primary reviewer for two recent publications from the Appraisal Institute - Valuation and Market Studies for Affordable Housing and Market Analysis for Real Estate.

The Real Estate Capital Institute's Editorial Advisory Group ("EAG") members typically serve a two-year term and include some of the nation's most renowned realty professionals and scholars. The group is composed of capital providers, investment bankers, investors, consultants, academicians and appraisers. The Institute solicits market comments from these industry leaders as well as other senior executives.

Although the Institute collects market research from various sources, EAG member observations are particularly important. Issued monthly or more frequently, depending upon market conditions, EAG comments track market momentum. To protect privacy and promote an open exchange of ideas, many EAG observations are often posted anonymously. Members' comments, furthermore, do not necessarily reflect opinions of their respective organizations, employers or the Institute.

According to the Institute's research director, Nat Zvislo, "Randal's expertise in affordable housing and low-income tax credits provide stronger depth to the Advisory Board's talent pool. Such programs are critical to realty capital market flow as federal, state and local funding assistance help launch more developments as private capital remains sidelined. "

ABOUT US:

The Institute is an independent research association dedicated to studying real estate capital markets. With roots dating back to 1983, the Institute is staffed by volunteers. The Institute's research is based on the analysis of current income-property debt/equity market data. Funding parameters -- including yields and pricing - are posted daily for apartment, industrial, retail, office and hospitality properties.

Based on EAG feedback, the Institute now covers markets with the highest frequency. Last year, for instance, the Institute recently announced the nation's first toll-free, independent mortgage rate watch (e.g., not advertising specific lender rates). The service is known at The Real Estate Capital Rateline 7RE-CAPITAL (773-227-4825). The newscast announces key Treasury, LIBOR, Bank Prime and permanent mortgage rates. The information is refreshed throughout each business day.

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Chicago, IL -- (ReleaseWire) -- 01/15/2009 -- Lenders are more selective than ever with current underwriting techniques reflecting very conservative parameters. And in particular, higher leverage fundings based on project values of the last couple of years are shunned. Instead, most lenders prefer internal valuation/underwriting models rather than simply applying debt service coverage and leverage restrictions to externally-generated valuations (e.g., purchase contracts and third-party appraisals).

These underwriting models are often known as "Black Box" formulas. Black Box formulas offer "quick and dirty" answers for initially screening most types of permanent, fixed-rate loans characterized by relatively predictable income streams. Two of the most popular Black Box formulas are "Front Door" (income-justified loan) and "Back Door" (loan-justified income). Each formula is described below along with a simple illustration.

Front Door:

The Front Door formula is used for computing the justified loan about based on a net operating income. In summary, the debt service coverage ratio is capitalized by the mortgage constant, as shown by the following example:

• If a project has a projected figure of $1 million stabilized net operating income; the cash flow available for debt service would be $833,333 ($1,000,000 divided by 1.20 debt service coverage).
• Thereafter, capitalizing the cash flow available for debt service at an 8% constant equates to a loan amount of approximately $10.4 million.
• Dividing the loan amount by 75% equates to a rounded value of $13,900,000.
• The original $1 million of net operating income translates to a capitalization rate of about 7.2%.

Back Door:

In contrast to Front Door loan underwriting needed for sizing project income, the Back Door uses the required loan amount as the key variable. The debt service coverage ratio determines the minimum net operating income as illustrated below:

• $10.4 million is the requested loan amount featuring an 8% mortgage constant restricted by a 1.20X DCR and a 7% cap rate.
• Multiplying the requested loan amount by the 120% yields a net operating income of $998,369.
• Capitalizing the net operating by 7% yields a value in excess of $13.3 million with a corresponding LTV of about 78%.

Loan Proceeds Restrictions:

The Front and Back Door formulas are often restricted by the lower of: (a) Loan-to-Value or (b) debt service coverage ratio. For example, in the case of the Back Door method, the loan may be limited to 75% rather than 78% (even though the debt service coverage complies at 1.20X).

Return-on-Cost Targets:

The Return-On-Cost is based on capitalizing the projected, stabilized net operating income by the total project costs. ROC calculations are especially useful for quickly computing justifiable project costs for new construction/substantial rehab ventures projects. Generally speaking, ROC yields should be at least 100 to 250 basis points higher Front and Back Door cap rates.

In the above examples, the project should generate cost returns of at least 8% to be reasonably profitable. In the cast of the Front Door example, the development should be built based on total costs of approximately $12.1 million-or-less to be considered a "profitable" development opportunity.

Limitations:

Black Box formulas are limited to static underwriting situations. Unlike dynamic underwriting formulas such as discounted cash flow analysis, static underwriting assumes a stabilized net operating income which increases or remains flat during the loan term (e.g., multifamily or net-lease properties). If the cash flows are expected to significantly fluctuate and/or are in the process of stabilizing, Black Box formulas generate inaccurate results.

ABOUT US:

The Real Estate Capital Institute® is a volunteer-based research organization that tracks realty rates data for debt and equity yields. The Institute posts daily and historical benchmark rates including treasuries, bank prime and LIBOR. Furthermore, call the Real Estate Capital RateLine at 7RE-CAPITAL (773-227-4825) for hourly rate updates.

For more information on this press release visit: http://www.releasewire.com/press-releases/release-3.htm

Chicago, IL -- (ReleaseWire) -- 11/21/2008 -- The expanding financial crisis hitting global markets as a result of domestic housing continues to torpedo the income-property mortgage market. Lenders and borrowers alike are frantically seeking answers to questions about where markets are heading including pricing, values and acceptable leverage levels.

People have more questions than answers including the following:

• How long will the housing crisis last?
• How much leverage is acceptable?
• Will securitized mortgage markets return?

Regardless of these questions and many other concerns facing the industry, bricks-and-mortar are physically and economically here to stay. Food and shelter are basic necessities with the real estate industry providing shelter for businesses, manufacturing and housing for the general population. Fundamentally real estate is a sound investment and will rebound in tandem with many other sectors of the economy.

The cause for panic is not necessary as repricing to more historically "reasonable" levels sets the stage for tremendous investment opportunities for investors knowing how to use limited leverage and assuming acceptable risks with the following trends emerging relating to yields and pricing:

• Capitalization rates rising by 100 to 150 basis points over from a year ago, translating to a pricing corrections of 10% to nearly 25% or more, depending upon specific submarkets and property types.
• Leverage levels will remain at 65% for permanent debt until lenders see more stability in the equity markets.
• Return-on-cost metrics demonstrate that investors need to see premiums of 150 basis points or more for new developments over and above existing capitalization rates because of attractive alternative investments. Return-on-cost will creep into double digits figures on a more regular basis, as a result.
• Overall "baseline yields" using relative value mortgage bonds are hovering above 7%, indicating a new floor for profitable lending.
• Equity yields for opportunistic properties will need to reflect 20% or more for short-term investments as substantially more attractive investment opportunities abound in the stock market.
• New-construction opportunities limited to all but the most carefully chosen and risk-free projects such as GSA built office buildings, for instance.
• Project downsizing and repositioning continues as condominium projects are reconverted to rentals. Vacant office buildings as well as retail facilities are in some cases changing to alternative uses such as industrial and multifamily projects.
• "Hesitation investing" prevails as buyers use time as an effective negotiating weapon for catching better terms and conditions.

In conclusion, whether or not the markets have been repriced to reflect current realities, opportunities should continue emerging as many investors look to liquefy their portfolios to maintain defensive ownership strategies in light of a cash-strapped economy.

For more information on this press release visit: http://www.releasewire.com/press-releases/release-3.htm

“No Go” Without Cash Flow…

Chicago, Illinois -- (ReleaseWire) -- 11/12/2008 -- The old cliche – "Cash Is King" is as true now as ever given the sparse availability of leverage. Nearly all real estate financings, both acquisition and refinancing, are restricted to funding projects with existing, in-place cash flow. Cash-flow projections, projects with value calculations based on appreciation (e.g., land) and other ventures lacking sufficient current income ventures are shunned. Lending is severely restricted as the Real Estate Capital Institute® estimates over 80% of conventional funding sources are temporarily out of the market.

What should be expected when seeking financing today in such a constricted lending atmosphere?

• Cash Flow: All in all, expect more conservative underwriting across the board when reviewing revenue streams. In addition to underwriting actual cash flow, lenders are providing further safety nets by including conservative occupancy calculations (using the lower of actual or market vacancy), higher management fees to reflect more hands-on operations, larger operating reserves and richer expenses including escalating property taxes and utilities costs.
• Sponsorship: More important then in any recent years, sponsorship financial net worth, experience and liquidity are tantamount. Even with nonrecourse loans, lenders need to be assured that borrowers have the ability to maintain projects running into operational difficulties. Borrower net worth should approximate loan amount and liquidity levels of about 25% are typical.
• Loan Terms: Lenders are competitive on rate, rather than leverage or other underwriting variables such as interest-only payments, property types or Earnout formulas. Only standard, income-producing properties such as apartments, shopping centers, office buildings and industrial properties are desirable as lenders have limited appetite for real estate debt in general. Expect 65% loan-to-value for all properties except apartments, which can reach closer to 75%. Overall rates are hovering in the 6% to 7.5%, including fixed and floating.

The bottom line?

As the markets remain constrained in the foreseeable future, lenders active in the market are extremely selective. Borrowers must prove themselves creditworthy, both at the project and sponsorship levels. As such, loan deliverability is the most important variable in today's real estate capital environment.

For more information on this press release visit: http://www.releasewire.com/press-releases/release-3.htm

Finance Industry Veteran Adds Healthcare Expertise

Chicago, IL -- (ReleaseWire) -- 11/07/2008 -- Jeffrey A. Davis, a healthcare industry finance veteran joined the Real Estate Capital Institute's Advisory Board. Jeff's real estate finance career spans more than 30 years including working with Baird & Warner Realty Finance Group and starting his own firm, Cambridge Realty Capital in 1983, headquartered in Chicago and Los Angeles. His expertise is in the field of senior housing including independent living, assisted living and congregate care financing. He has financed in excess of $2 billion of healthcare projects during his career.

Mr. Davis is a graduate of the University of Illinois-Champaign and holds a Masters Degree in Appraisal and Real Estate Investment Analysis from the University of Wisconsin-Madison. Jeff has also authored many articles and holds seminars on healthcare finance issues.

Notes Mr. Davis, "the Institute is a respected forum for presenting fresh and objective real estate capital market opinions. He adds, "I'm glad to be a part of this organization in providing current perspectives on healthcare finance, an increasingly important component of the real estate capital markets given favorable demographic trends."

ABOUT US:
The Real Estate Capital Institute® is a volunteer-based research organization that tracks realty rates data for debt and equity yields. The Institute posts daily and historical benchmark rates including treasuries, bank prime and LIBOR. Furthermore, call the Real Estate Capital RateLine at 7RE-CAPITAL (773-227-4825) for regular rate updates.

For more information on this press release visit: http://www.releasewire.com/press-releases/release-3.htm

Numerology Adds Humor to Real Estate Capital Valuation Principals in an Uncertain Market

Chicago, IL -- (ReleaseWire) -- 10/06/2008 -- The start of the mortgage meltdown over a year ago continues wrecking havoc on the real estate capital markets. In particular, accurate property valuation is nearly impossible as buyers and sellers are sidelined due to limited debt availability.

Few properties are trading hands. Most investors believe values are trending downward in response to economic malaise, oversupply and lack of affordable debt. As such, experts are using higher cap rates for valuating assets for most types of commercial and income properties. Lenders, in particular, are "creating" values by underwriting capitalization rates which may, or may not, reflect current market prices. These cap rates are typically higher than many sellers are buyers expect, resulting in lower loan proceeds based on loan-to-value restrictions. Yet, owners often refuse to sell or acknowledge asset values based on lenders' higher cap rates, choosing to do nothing, instead.

In this stalemate, who's right and where are cap rates heading?

An amusing theory discussed by some experts as a humorous factoid suggests that current capitalization rates are directly correlated to the recent year numerical identity as indexed to the current real estate capital boom/bust cycle. Today's market cycle peaked in 2007, with 2005 and 2006 ranking as the best years for very attractive valuations; in other words, low capitalization rates.

As for 2008, an 8% capitalization rate is the "strike price" for sellers motivated to liquidate properties. While the markets are illiquid and few transactions leave any proof of value, an 8% capitalization rate reflects a weighted-average premium tied to the cost of capital for most types of income properties. Applying the same logic in a downward market, 2009 should yield a 9% rate and a 10% cap rate would prevail in 2010.

Linking cap rates to year numerology is certainly an unrealistic discussion for measuring values in the currently volatile market. Yet as investors search for answers in such uncertain times, numerology adds more theories to an already confusing time.

For more information on this press release visit: http://www.releasewire.com/press-releases/release-3.htm

Chicago, IL -- (ReleaseWire) -- 10/16/2008 -- The commercial real estate capital markets are tightly strapped into the Wall Street roller coaster with rates jumping up and available funds tumbling down. During the past week mortgage pricing has been rapidly climbing based on spreads over comparable-term treasuries. Key market highlights are as follows:

• About 80% +/- of the traditional funding sources (life insurance companies, pension funds and banks) remain sidelined, waiting for more capital market stability.
• Five-year permanent loans are frequently breaking the 7%-mortgage-rate barrier, translating to spreads of about 400 basis points
• 10-year loans, the most common term, are priced 7.5% or more.
• Exceptions apply: Prime multifamily and commercial properties with limited leverage of 50% or less, pricing occasionally reduced by as much as one half of a percent.
• Lenders will only seek conventional property types (apartment, industrial, office and retail); projects with "stories" shunned.
• Funds are still selectively available for refinancing, with a loan restriction of 65% +/- LTV.

As a comparison, today's commercial mortgage terms and conditions reflect pricing not seen since the beginning of the decade (See Historical Mortgage Rates posted since 1983: http://www.ratesdata.com). However, leverage levels and funding availability are substantially less favorable than that time as owners must post at least 10 to 15% more equity.

For more information on this press release visit: http://www.releasewire.com/press-releases/release-3.htm

Despite Mortgage Freeze, Ample Funds Available for Targeted Realty Developments

Chicago, IL -- (ReleaseWire) -- 10/08/2008 -- Swooning financial markets continue dislodging all sectors of real estate capital with a vengeance. Funding sources retreat from income-property lending on a daily basis because of liquidity concerns, profitability, overexposure and a host of other factors plaguing this sector. No conventional lenders are immune including banks, life insurance companies, savings institutions and private funding sources.

Yet a few bright stars shine in the otherwise pitch-dark capital markets. These stars are lenders with funding goals and objectives that are not exclusively driven by profits. The Real Estate Capital Institute identifies this group of funding sources as "Mission Money" who provide "Policy Proceeds." The four highlights of Mission Money are as follows:

1. Purpose: Mission fund objectives vary focusing on public policy (e.g., affordable housing, urban renewal), labor creation, specific geographic investing and property types to name a few. Typical examples include generating jobs through union labor funds, constructing affordable apartments and reinvigorating economically deprived commercial areas. Often times, many of these objectives are bundled - e.g., affordable housing with union labor in redeveloping urban "infill" areas endowed with heavy tax incentives.
2. Property Types: Unlike pure non-profit funding sources, Mission Money exclusively targets income properties, namely commercial and multifamily properties.
3. Policy Proceeds: Direct funding structures include construction, interim and permanent loans as well as equity contributions. Popular indirect fundings include tax credits, tax breaks and rebates.
4. Sources: The lending arena includes federal governmental agencies (e.g. Freddie Mac, Fannie Mae, FHA and the Treasury) and local municipalities (tax increment districts), endowments, pension funds, life companies and private capital providing funds directly (construction and permanent funds) and indirectly (tax credits).

According to John Oharenko, an industry veteran who serves on the advisory board of The Real Estate Capital Institute®, "In 2009 and 2010, Mission Funds will play an even more important role in supporting real estate capital markets as many conventional funds stay sidelined." He adds, " Even as conventional markets recover, Mission Money will remain a reliable source of funds for developers, investors and others willing to learn about and implement these targeted programs."

For more information on this press release visit: http://www.releasewire.com/press-releases/release-3.htm

The real estate correction is just that... a true correction of values based on historical norms.

Chicago, IL -- (ReleaseWire) -- 09/16/2008 -- About a year ago, the real estate capital markets turned topsy-turvy. Investors, lenders and real estate professionals alike panicked. Debt and equity funds nearly evaporated based on false risk/reward expectations. Nearly all capital markets reached "pricing nirvana," leaving no room for error as prices peaked to unchartered levels. Typical income-property loans often were priced within a percent of treasuries -- well beyond any historical underwriting guidelines measuring debt coverage margins, leverage and valuations.

Today, the opposite is true. Over-reactive fear governs expectations. The aftermath of the mortgage-backed securities re-pricing and fresh concerns about financial institutions' real estate portfolios force investors to the sidelines. Mortgage markets remain dislocated and more problems appear on the horizon.

Are real estate markets in a continuing downward spiral? Not exactly, if history is any guide.

Markets are reaching "correct" levels as measured by the past decade. Many will argue the past five years' realty capital market conditions were abnormal. Investors scrabbled from the "tech wreck" in search of new profit frontiers; Wall Street greeted them offering lucrative yields blessed by the rating agencies. The model worked as long as values continued climbing.

The rating agencies claimed the new role as risk arbitrators of real estate capital – an untested valuation model for monitoring rapidly expanding mortgage securities market. Wall Street became Main Street for policing realty supply-and-demand risk fundamentals as well as the traditional role of providing capital. The judge and the jury.

By the end of 2006, overall commercial property pricing skyrocketed to unsustainable levels as values increased by as much as 40 to 50%, while rent levels remained flat -- or even declined. Investors justified such economics by accepting lower profit thresholds often based on optimistic cash flow projections.

In contrast, more "correct" market conditions existed during the late 1990s. Project yields were more evenly matched to interest rate costs. During this era and for most of the Twentieth Century, investment returns normally required positive leverage based on current cash flows, resulting in positive leverage.

In conclusion, John Oharenko, a Member of the Real Estate Capital Institute's advisory board, notes "the [current] correction will continue with prices trending downward until equity investors start capturing more sensible yields in line with the cost of debt". He adds, "Unrealistic equity premiums need to be removed from pricing expectations."

This re-pricing is a healthy side effect of excessive capital market behavior. Measurable, risk-adjusted cash flow will dominate investor's return expectations -- back to basics!

For more information on this press release visit: http://www.releasewire.com/press-releases/release-3.htm

Chicago, IL -- (ReleaseWire) -- 02/11/2008 -- Investment sales activity in 2007 finished at near record levels despite the national disruption within the debt capital markets. Many firms reported Fourth quarter numbers were down significantly from historical norms and activity levels are expected to be lower in the foreseeable future. Driven by changing debt availability and terms, significant pricing gaps among buyers and sellers are creating delays in launching of any major assets sales. This slowdown is expected to continue well into 2008 until liquidity returns to the marketplace.

Lender pull-back on loan-to-value ratios, amortization schedules and increase spreads resulted in quantifiable changes in certain valuations. Recession fears and cautious economic outlooks continue to created hesitations among most investors. Several transactions on the verge of coming to market are delayed as seller timing and forecasting remains the deciding factor. In many instances values of certain property types (particularly B and C-grade) are down by as much as 15%. For example, the table below illustrates office property debt and equity revised pricing as of early February.

According to James Postweiler, an Advisory Board Member of The Real Estate Capital Institute®, "A window of opportunity is open for investors with cash and the willingness to break from the heard. Those that follow through and close with little difficulty will emerge as preferable entities and will be selected as winning bidders even at lower-priced offers." He adds, "Reliability - equal with price - has risen as a primary consideration in seller decisions."

ABOUT US:
The Real Estate Capital Institute® is a volunteer-based research organization that tracks realty rates data for debt and equity yields. The Institute posts daily and historical benchmark rates including treasuries, bank prime and LIBOR. Furthermore, call the Real Estate Capital RateLine at 7RE-CAPITAL (773-227-4825) for hourly rate updates.

For more information on this press release visit: http://www.releasewire.com/press-releases/release-3.htm

Chicago, IL -- (ReleaseWire) -- 01/02/2008 -- The new year triggers new hopes and fears as real estate capital markets continue readjusting from nearly a decade of uninterrupted volume and pricing momentum. While many investors fear new funding restrictions, others welcome more disciplined and "customary" underwriting practices deemed to be "normal."

December reflected continued uncertainty with the Fed dropping rates by a quarter-point for the third consecutive time. Are more rate cuts in store for 2008? Will funds continue being more restrictive throughout the year? These and many other questions revolve around understanding markets as more clearly defined by different lender profiles. In other words, various lenders offer programs that don't necessarily converge in pricing and underwriting as was prevalent during the first half of 2007. In summary, the following key groups of lending platforms are available today:

Banks -- Banks, particularly European financial institutions, represent the most attractive floating rate pricing available. Overall spreads over LIBOR range as low as 170 basis points to over 200 basis points or more, depending upon the risk profile, leverage and property type. Banks are still relatively active for construction and acquisition loans.

Agencies -- Freddie Mac, Fannie Mae and FHA/HUD are the most competitively-priced permanent lenders of any funding source in the marketplace. Overall pricing of 170 basis points or greater over comparable-term treasuries is still available. However, multifamily properties are the only beneficiaries of such attractive pricing.

Life insurance companies -- Life companies have been the backbone of commercial property lending for more than 100 years. Permanent loans are priced in excess of 200 basis points over comparable-term treasuries. Funds are available, although on a more limited basis as allocation benchmarks have been rapidly depleted as some borrowers move away from securitized loans. Most life insurance companies impose restrictions of 75% leverage with minimum debt service coverage ratios of 120% for traditional income properties including multifamily, retail, industrial and office assets.

Mortgage conduits -- By far, the most affected players in the marketplace during the past six to eight months. Very cautiously funding permanent debt at pricing of at least 275 basis points over comparable-term treasuries. Securitized lender's tread capital markets with great caution as daily pricing adjustments cause havoc for lender's trying to size deals with any certainty.

According to Gary Duff, member of the Editorial Advisory Group of the Real Estate Capital Institute, "Securitized lenders are not currently quoting deals to win." Instead, he notes, "They will lend, but only under their terms."

ABOUT US:
The Real Estate Capital Institute® is a volunteer-based research organization that tracks realty rates data for debt and equity yields. The Institute posts daily and historical benchmark rates including treasuries, bank prime and LIBOR. Furthermore, call the Real Estate Capital RateLine at 7RE-CAPITAL (773-227-4825) for hourly rate updates.

For more information on this press release visit: http://www.releasewire.com/press-releases/release-3.htm

Debt Term Needs to Match Sponsorship Operating Objectives

Chicago, IL -- (ReleaseWire) -- 12/18/2007 -- Prepayment penalties can be substantial to borrowers, as well as attractive profit protection for lenders. Borrowers need flexibility, while lenders seek yield preservation.

Prepayment language is more important today, as the yield curve favors long-term debt with better pricing and terms than shorter maturities. All being equal other than term, the major difference between notes rests within the prepayment calculations.

Nearly all short-term loans of five years or less have liberal prepayment penalties, and occasionally, none. Long-term debt is often burdened by the prepayment penalties that can cost as much as 10% or more of the loan balance, depending on the formula used.

Some overall rules about prepayment penalties are as follows:

1) Usually locked out from prepayment during first half of the term
2) Negotiable if coupon rate is substantially below current market rate
3) Minimum penalty typically at one percent
4) Yield-maintenance formula works best for borrowers expecting lower rates later in the term
5) Declining Balance formula provides calculated certainty in loan payoffs
6) Defeasance formula requires costly processing and multiple approvals - more applicable for locked cash flow loans (e.g., long-term, net lease properties)
7) Types of funding sources have a direct correlation on prepayment formulas (e.g., balance sheet lender has more flexibility than lender intending to sell the note)

Nat Zvislo, Research Director of the Real Estate Capital Institute® states "Prepayment penalties should closely match the borrower's holding term and operating objectives." Adding, "The premium negotiated is often the difference between a 'good' loan and a 'great' loan."

ABOUT US:
The Real Estate Capital Institute® is a volunteer-based research organization tracking debt and equity rate data. The Institute posts daily and historical rates including treasuries and short-term rates. The Real Estate Capital RateLine 7RE-CAPITAL (773-227-4825) provides hourly updates.

For more information on this press release visit: http://www.releasewire.com/press-releases/release-3.htm

Land Development Financing Selectively Available

Chicago, IL -- (ReleaseWire) -- 10/29/2007 -- The highest risks and rewards are clearly centered in the land acquisition and development arena. Land is the first development ingredient impacted by economic cycles as is painfully obvious in today's residential markets. And even in good times, land is burdened with costs and seldom offers income.

And while land development is in the doldrums, should developers give up on this sector for now? And if not, are the capital markets even interested in funding land development?

Developers with strong local market expertise should not give up on the market as long as costs can be controlled over a prolonged timeline. As such, local presence is crucial for success because:

• Land deals may take three or longer before any results are shown. For example, many experts predict the current residential markets will not fully recover until 2010 or longer.
• National firms don't have the expertise and community relationship skills of local players.
• Communities often mistrust "outsiders," translating to longer entitlement processes and higher risk of failure.
• Satellite-office operating costs often don't justify local market presence for all but the largest projects.
• Goodwill – Communities recommend and approve new opportunities in the area.
• Making a difference – the satisfaction of improving a community and offering better standards for its residents.

Capital market sources are also more comfortable with "on the ground" experienced land players, as their developments are focused within a specific area. Funds are available, but on a selective basis. Today's funding parameters are as follows:

• Overall yields of 25% or more.
• Fifty percent or less of value.
• Floating-rate, pricing of 175 basis points or more over LIBOR.
• Recourse financing typically required, unless more equity is available.
• Financial net worth should, at a minimum, be greater than land value.

According to The Real Estate Capital Institute®'s advisory board member, John Oharenko, "Land development ventures will be one of the best investment opportunities available, particularly broken deals that can be completed by seasoned players with solid financial backing."

ABOUT US:
The Real Estate Capital Institute® is a research organization staffed by industry volunteers who collect and track debt/equity rate data. The Institute's website provides daily and historical rates including treasuries and short-term rates. The Real Estate Capital RateLine (773-227-4825) announces hourly rate updates throughout each business day.

For more information on this press release visit: http://www.releasewire.com/press-releases/release-3.htm

Chicago, IL -- (ReleaseWire) -- 10/29/2007 -- Within the past five years, student housing has been promoted to a favorite property type and subcategory within the multi-family real estate finance sector. Historically, this entrepreneurially-driven industry was controlled by local/regional players. Now, more national firms are acquiring and aggregating student housing portfolios – especially in major university campuses. This sector promises dynamic growth as many institutions are severely in need of affordable and available student housing within near campuses. Furthermore, this sector is not as closely tied to the current residential market malaise as higher education is in strong demand and limited facilities are available.

The real estate capital markets have taken notice. Mortgage conduits, agencies (e.g. Freddie Mac and Fannie Mae), life companies, banks and other institutional funding sources offer attractive competitive funding options for student housing ventures. In the past, lenders would have numerous restrictions on funding such properties including leverage, required parental guaranties and age/property quality issues. However, many restrictions disappeared as ample capital is available to fund these properties based on the following overall parameters:

• Property types -- dormitory, off-campus and hybrid properties are acceptable. Older properties are financeable, particularly within close proximity to a campus. Otherwise, newer, more attractive properties are more desirable.
• Leverage/loan amounts -- loan amounts of all sizes are considered, particularly with the local banks and funding institutions. Otherwise, major institutional lenders prefer $5 million or more. Leverage of 80% is common. Additional mezzanine financing selectively available for properties with demonstrated upside potential.
• Pricing/amortization – Ten-year permanent loan pricing ranges within the 140 basis points spread over comparable-term treasuries to as much as 200 basis points for older properties. The most common pricing falls within 175-basis-point range. Mezzanine loans above 80% LTV are priced starting from 12%. Thirty-year amortization is offered for newer properties (10 years or less) and interest-only payments are occasionally available for lower leverage loans of 65% or less LTV. Most other loans will feature 25-year schedules.

Observation:

Luxury student housing -- Conventional wisdom dictates that student housing should be affordable and competitively priced as students are on tight budgets. Such facilities are fully-occupied and in short supply. Furthermore, new construction costs are prohibitive as well as premier sites close to campus are difficult to find. In other words, affordable student housing is at best, problematic.

Yet an emerging trend is clearly evident – luxury student housing. Many parents [and students] are demanding higher-quality housing and factoring such costs into the overall tuition equation. Select campuses throughout the country are even sponsoring - and encouraging - developers to create more inventory. As such, luxury student housing is among one of the best new development opportunities available.

According to John Oharenko, an advisory board member of The Real Estate Capital Institute®, "Student housing is truly one of the last attractive development frontiers. Steady performance along with insatiable demand for higher education will continue fueling growth in this property sector."

ABOUT US
The Real Estate Capital Institute® is a volunteer-based research organization tracking debt and equity rate data. The Institute posts daily and historical rates including treasuries and short-term rates. The Real Estate Capital RateLine 7RE-CAPITAL (773-227-4825) provides hourly updates.

For more information on this press release visit: http://www.releasewire.com/press-releases/release-3.htm

Higher Yield Preferences Expand Risk Tolerances

Chicago, IL -- (ReleaseWire) -- 10/22/2007 -- Despite real estate debt market turmoil, overall equity yields for income properties remain near 40-year-lows. While bargain-hunting abounds in the residential arena -- particularly new condominium developments in overbuilt metro areas, investors still crave for high-quality, income properties. While the mode is cautious and selective, funds are readily available as public funds, private capital, foreign buyers and tax-exchange players aggressively hunt for Class-A properties -- assets with strong cash flow and upside potential.

Key equity market highlights are as follows:

• Players - institutional investors represent some of the most competitive yield guidelines for existing, stabilized properties based on longer-term hold strategies of five years or more.
• Yields - Overall yields are below ten percent. Core assets yield about 7% to 8%; Core Plus properties trade in the 8%-9% range. Opportunity plays trade with yields of up to 12%.
• Alternative Property Types – Conventional property types (apartment, industrial, office and retail) generate slim yields prodding investors to expand into alternative risk profiles. Lodging, self-storage, manufactured housing, senior living and recreational projects are among the choices gaining strong consideration. However, financing and operational considerations propel yields of at least 15% or more above conventional assets.
• Replacement Cost Thresholds - Often, Class-A property prices flirt with replacement costs as investors pay premiums for outstanding infill locations, preferring to avoid construction risks. New construction opportunities are becoming more attractive, especially in those markets with substantial supply constraints (e.g., San Francisco). Depending on preleasing economics, overall investment yields for the best-quality new construction projects are in the lower-to-mid teens.

OBSERVATIONS
According to the Real Estate Capital Institute®'s research director, Nat Zvislo, "While overall equity yields remain low and financing is more challenging, real estate investing still offers better returns compared to many stock/bond prospects."

ABOUT US
The Real Estate Capital Institute® studies realty equity and debt data for income properties. Information is updated daily on website (http://www.reci.com). Mortgage interest rates and indices are updated hourly via the Real Estate Capital Rateline (773-227-4825).

For more information on this press release visit: http://www.releasewire.com/press-releases/release-3.htm

Chicago, IL -- (ReleaseWire) -- 10/09/2007 -- Medical Office Buildings (MOBs) are one of the more exciting development and acquisition opportunities within the income-property investment arena. However, given today's uncertain financing market conditions, these properties require more underwriting knowledge than other conventional property types (e.g. apartment, retail and office properties).

As such, investors need to understand the key secrets in capturing the most competitive pricing and financing options. These secrets are listed as follows:

• Secret #1 – Finding Capital Sources: Lenders are more selective on reviewing projects (including MOBs), yet liquidity still remains. Life insurance companies are the most active players in the MOB marketplace now for funding existing projects. For the most part, life companies are using their balance sheets and not publicly issuing securitized mortgage debt – the current fear of Wall Street. Mortgage conduits, on the other hand, are still active, but will typically offer pricing at the higher end of the spectrum.
• Secret #2 – Check Pricing: Overall pricing in today's marketplace is within the 140 basis point range to 220 basis-point range over comparable term treasuries for permanent financing. Rates are 5.75% to 6.65% for longer term MOB deals using ten-year treasury pricing. [The Real Estate Capital Scoreboard (www.reci.com) gives a good indication of today's spreads and rates by property types. MOBs are most similarly priced to regular office properties]
• Secret #3 – Seek Lower Leverage: Most MOB deals are funded within the 180-basis-point-or-more range for full leverage deals based on 70% loan-to-values. Lower-leveraged fundings of 65% or less can dip to 160 basis points.
• Secret #4 – Lock Rate Before Starting Construction: For new construction and substantial rehab, add 20 to 30 basis points to standard MOB pricing to lock rates now with funding reaching out as much as 18 to 24 months. At the moment, however, forward funds are very limited.
• Secret #5 – Bigger is better: Lenders charge an additional 10 to 20 basis points for loans below $10 million.
• Secret #6 – Seek Newer Properties: Properties of seven years or less often capture loan amortization schedules of 30 years; older properties are underwritten within 25-year-or-less amortization schedules. Longer amortization schedules translate to higher cash.
• Secret #7 – Compute Costs and Values based on Loan Underwriting: Rather than using capitalization rates and purchase-price LTVs, lenders now rely on debt service coverage tests for determining loan proceeds. Today, a 120% debt service coverage ratio is the standard for a multi-tenant building. An 8% mortgage constant is typically applied to determine the maximum leverage of the loan. For example:
o If a project has a projected figure of $1 million stabilized net operating income, the cash flow available for debt service would be $833,333 ($1,000,000 divided by 1.20 DSC).
o Thereafter, capitalizing the cash flow available for debt service at an 8% constant equates to a loan amount of approximately $10.4 million.
o Dividing the loan amount by 75% equates to a rounded value of $13,900,000.
o The original $1 million of net operating income translates to a capitalization rate of about 7.2%.
o The return-on-cost target for a new development project should be above this figure, preferably in the range of 100 basis points or more (8.25% or more). In other words, the development should be built based on total costs of approximately $12.1 million or less to be considered a "reasonable" development opportunity.

John Oharenko, an advisory board member of The Real Estate Capital Institute®, suggests that "MOBs are certainly financeable, especially those affiliated with hospitals and other established health-care networks."

ABOUT US:
The Real Estate Capital Institute ® is a volunteer-based research organization that tracks realty rates data for debt and equity yields. The Institute posts daily and historical benchmark rates including treasuries, bank prime and LIBOR. Furthermore, call the Real Estate Capital RateLine at 7RE-CAPITAL (773-227-4825) for hourly rate updates.

For more information on this press release visit: http://www.releasewire.com/press-releases/release-3.htm

Underwriting Criteria More Stringent, Yet Realty Construction Funds Available

Chicago, IL -- (ReleaseWire) -- 09/27/2007 -- Given this late summer's tumultuous realty capital markets and property oversupply concerns (e.g., retail and residential), borrowers are often puzzled about how new construction loans are underwritten.

Conventional wisdom dictates the most important factors for underwriting and funding a construction loan include the basics: equity, borrower financial status, location and project costs/physical characteristics and projected economics. While these variables are fundamental for underwriting a loan, questions remain as to the specific details for approving a loan at the "correct" level.

Not every lender has a "secret black box" for sizing loans. However, some clear underwriting trends are emerging, including the following:

1. Completion guarantees are supplemented with full recourse, even after project completion.
2. Where applicable, more stringent preleasing requirements to generate at least breakeven cash flow on debt service.
3. 120% or more debt service coverage ratios applied on "stress test" mortgage constants (within the 7.5% or more range) which replacing capitalization rate valuations for calculating leverage underwriting restrictions – generally translating to loans of 75% or less of appraised value based on stabilized cash flow analysis.
4. Extremely wide pricing variations with a range of 150 basis points or more over the floating-rate index --- typically LIBOR.
5. More costs as a minimum fees are increased (typically 1%) and other incentives reduced, or removed, such as discounted legal and third party processing fees.
6. Existing clients receive greater preferential treatment as lenders are more selective and cautious regarding new client relationships.
7. Given this month's LIBOR volatility, other indexes are negotiated (e.g., Prime, treasuries.)
8. Exotic financing vehicles such as mezzanine, preferred equity and other high-leverage are shunned. Projects need to have "clear and simple" equity.

The research director of the Real Estate Capital Institute, Nat Zvislo says "Construction loans are summarized as more, more, more…More preleasing, more equity, more yields, more fees and more guarantees." Adding, "All factors equate to less risk."

ABOUT US:
The Real Estate Capital Institute® is a research organization studying domestic debt and equity markets for commercial properties. The Institute's website (http://www.reci.com) offers various information on fixed and floating rate debt pricing. Interest rate updates are available on an hourly basis by calling the Real Estate Capital Rateline at 1-7RE-CAPITAL.

For more information on this press release visit: http://www.releasewire.com/press-releases/release-3.htm

Despite Market Turmoil, Long-Term Permanent Loans Find Best Mortgage Pricing

Chicago, IL -- (ReleaseWire) -- 09/19/2007 -- Since December, the yield curve remains inverted, suggesting the looming threat of a recession and credit market turmoil. However, the previous time the yield curve inverted within the past decade, a recession did not occur. This phenomenon has proven to be a result of domestic and international investors flocking to longer-term, US debt instruments. The winners, of course, are long-term borrowers. Here's why:

1). Abundant supply funds and lenders (although pricing is readjusted to closer reflect risks in subprime debt)
2). Amortization schedules flexible, including interest-only
3). Best spreads and lowest rates as compared with other shorter terms
4). Ideal for fixed-income, cash flow (e.g., single tenant, credit lease)
5). Nearly all types of income-properties with provable cash flow are suitable
6). Long-term protection against inflation and rate increases, as rates are locked
7). Property will be worth more with below-market debt, should interest rates increase
8). Closing costs and bundled third-party fees are competitively priced and spread out over a longer term
9). Flexible loan payoff provisions are negotiable at an additional charge
10). Various leverage levels provide additional discounts and pricing options

The main risks of locking into long-term debt include: short-term hold/sell strategy, interest rate declines create lower asset values, limited flexibility for additional loan proceeds and restrictive prepayment provisions.

The Real Estate Capital Institute's research director, Nat Zvislo, says "Real estate capital markets have changed substantially since this July. However, long-term financing still remains a bargain. Adding, "Ten-year-term loans are often priced 15 to 20 basis points lower than shorter-term debt of five to seven years as mortgage buyers prefer longer-term notes."

The Real Estate Capital Institute (http://www.reci.com) is an independent research organization exclusively dedicated to studying domestic debt and equity capital markets for commercial and other income properties. Mortgage data for long-term debt covering different property types is also available. On a daily basis, the Institute reports hourly interest-rate updates through the Real Estate Capital Rateline at 7RE-CAPITAL (773-227-4825).

For more information on this press release visit: http://www.releasewire.com/press-releases/release-3.htm

Recent Short-Term Rate Changes Prompt Borrowers to Sharpen Pencils on Pricing

Chicago, IL -- (ReleaseWire) -- 09/17/2007 -- During the subprime credit crunch of the past two months, most of the focus remains on loan performance and treasury rates. While these indices are accurate gauges of market conditions, a long-ignored index resurfaced on the watchlist -- LIBOR ( London interbank offering rate).

While treasuries and other domestic rates continued declining, LIBOR climbed more than 50 basis points during this time. Caught off-guard, realty borrowers quickly discovered this index moved in the opposite direction of Treasuries. LIBOR increased based on a variety of factors, including:

• International Bank Uncertainty: This index is the international bank pricing benchmark. Many European banks, for example, one US mortgage subprime debt. These banks are concerned about credit quality erosion and are protecting their portfolios, requiring higher risk premiums to reflect more uncertainty within the marketplace.
• Strong Demand: The high demand for floating-rate debt within uncertain market conditions allows institutions to capture larger rate premiums.

LIBOR's re-pricing forces borrowers to move from the floating-rate sidelines and reevaluate their capital needs/pricing using the following four guidelines:

1. Optimum Index: If floating rate debt is needed regardless, immediately review other indices including Prime and other government/bank indices. Should request the option to change indices during loan term.
2. Longer-Term Hold: A holding strategy will be more permanent (e.g. five years or more), redirecting financing towards fixed rate pricing. Fixed-rate pricing is over 25 basis points more price competitive than floating-rate debt given market conditions of mid-September.
3. Debt Value Enhancement: Belief in rising rates prompts the decision to capture permanent debt as such funding would likely enhance property values with "below-market" debt at a future date.
4. Project Dynamics: Floating-rate debt is required for repositioning selling assets. If the timeframe is relatively short, borrower should look into purchasing interest rate hedges.

According to John Oharenko, advisory board member of the Real Estate Capital Institute®, "Floating-rate debt based on LIBOR should be re-examined as a pricing index." He adds, "However, a financing decision should not solely drive property holding strategies, especially if sale or redevelopment is looming."

ABOUT US:

The Real Estate Capital Institute® is a volunteer-based research organization that tracks realty rates data for debt and equity yields. The Institute posts daily and historical rates, including LIBOR. Call the Real Estate Capital RateLine at 7RE-CAPITAL (773-227-4825) for hourly updates.

For more information on this press release visit: http://www.releasewire.com/press-releases/release-3.htm

Affordable Phone Answering Service System Delivers Automated, Continuous News

Chicago, IL -- (ReleaseWire) -- 09/10/2007 -- Regardless of technological change, the basics remain the same - all communications are filtered by the five senses of seeing, hearing, touching, smelling and tasting. No small wonder that American business spends billions every day targeting the senses. And, the rules for reaching those senses are changing dramatically.

The Internet now controls the "eyeballs" and is the media of choice, rapidly overtaking print media in reaching millions instantly. On the other end of the spectrum, touching, tasting and smelling are only possible "in person," based on physical contact.

What's left? The ear. Telephone and radio are the most important "ear" technologies and have remained essentially unchanged during the past century. However, these two devices are converging. For example, radio listeners must either wait to hear their news or call specific sources and request an update. The internet provides broadcasts expanding to radio and similar devices (e.g., podcasting) with more specific choices. However, the telephone is still the preferred media choice for very specific, targeted information and has the largest audience.

What about situations for news broadcasts on-demand by simply making a phone call? Weather and traffic reports, interest rates, stock/bond prices are just some examples of very specific information that is regularly updated. Only the largest organizations such as airlines and governmental agencies can afford to operate sophisticated phone operating systems for handling updates.

Dial4News technology is bridging the gap between the telephone and radio newscast by using affordable PC technology and off-the-shelf hardware/software solutions. Businesspeople and technology experts have teamed together and designed a breakthrough method of automating news delivery by the Internet and telephone. This patent-pending process is based on applying voice recognition technology with current market data and sending such a sound files to telephone answering services and switching stations.

Dial4News technology and research are sponsored by The Real Estate Capital Institute. The Institute's research director, Nat Zvislo, notes "We're excited by such a technology and use it for updating interest rates and mortgage data for commercial real estate professionals. Zvislo adds, "We are exploring the use of this technology for stock and bond market updates. In other words, any news that's worth a phone call."

To hear Dial4News technology in action, call the Institute's Toll-free, commercial mortgage Rateline at 1-US-RATE-WATCH (1-877-283-9282). The Institute's phone website is http://www.usratewatch.com.

For more information on this press release visit: http://www.releasewire.com/press-releases/release-3.htm

Five Tips on Sizing the Borrower for Income Property Loans

Chicago, IL-- (ReleaseWire) -- 06/15/2007 -- In today's overheated realty capital markets, most of the underwriting focus is on property location, physical issues and cash flow performance. And in specific instances - particularly long-term, net leased properties - these variables are sufficient enough to accurately underwrite an income-property loan.

Yet the 'people' variable can't be ignored. Sponsorship operating expertise, track record and net worth are critical factors for sizing the ownership. Most properties require qualified ownership expertise because physical maintenance, cash flow management and other important variables require 'hands on' attention including hospitality, apartment and multi-tenant commercial properties.

As with other underwriting variables, sponsorship requirements are more liberal now than in the past. The following requirements provide overall guidelines for analyzing borrowers today:

1) Net Worth -- ideally sponsorship should have a net worth equal to the loan amount. This requirement is generally waived if the project cash flow is supported by qualified tenants with longer term leases of 10 years or more.
2) Liquidity - twenty percent of the net worth should be in cash or equivalent liquid assets.
3) Expertise - should have market presence and at least three to five years of operating similar types of assets.
4) Reputation - self-explanatory. Numerous borrowers active during various economic cycles have been stained by property performance issues. However, if such problems occurred including bankruptcy and foreclosures, detailed explanations should be immediately disclosed.
5) Guarantor – Although most income-property loans are non-recourse, a guarantor is required for carveouts (fraud, waste and mismanagement) and environmental conditions. Lenders generally adhere to strict guidelines for environmental guarantees, although insurance can be purchased by borrowers with insufficient financial resources.

The five variables mentioned above are measured and balanced in tandem. Nat Zvislo, research director of the Real Estate Capital Institute, suggests "Sponsorship should have strong documentation backed by qualified references."

ABOUT US:

The Real Estate Capital Institute is a volunteer-based research organization that tracks realty rates data for debt and equity yields. The Institute posts daily and historical benchmark rates including treasuries, bank prime and LIBOR. Furthermore, call the Real Estate Capital RateLine at 7RE-CAPITAL (773-227-4825) for hourly rate updates.

For more information on this press release visit: http://www.releasewire.com/press-releases/release-3.htm

Minimal changes in capital markets. Given lower equity returns combined with favorable debt pricing, investors are using more equity dollars to capture positive-leverage returns.

Chicago, IL -- (ReleaseWire) -- 02/02/2007 -- During January, key treasury rates steadily climbed by about a quarter percent, rebounding slightly with yesterday's Fed announcement to hold rates steady. Overall rates are similar to spring, 2006, although mortgage spreads continued narrowing. As is the case since August with short-term rates, Bank Prime and LIBOR stayed unchanged.

During the month, a variety of mixed signals hit the capital markets. The Labor Dept. reported the lowest inflation in three years. The Fed also warned of a financial crisis due to mounting government debt as baby-boomers enter retirement age – warning of sharp spending cuts, tax increases or both. Housing starts unexpectedly rose and building permits to the highest their highest levels in four years. Lastly, residential construction dropped nearly 15%, the biggest yearly decline since 1991.

With incredibly competitive lending conditions, lenders have dropped spreads over treasuries by five basis points or more. Mortgage spreads between various property types remain very tight. Class-A apartments, lodging, industrial, office and retail properties are priced within a 25 basis-point-range.

The most commonly discussed issues within the past month include:

(1) Steadily rising rates.
(2) Condo projects converted to rental units.
(3) Have income-property prices finally peaked?
(4) Office markets continue signs of steady improvement.

OBSERVATIONS:

James Postweiler, an Advisory Board Member of The Real Estate Capital Institute says, "Institutional buyers are increasingly optimistic about rental revenue growth accompanied by lower vacancies." He adds, "Cap rates and IRR targets remain steady and aggressive."

ABOUT US:

The Real Estate Capital Institute is a volunteer-based research organization that tracks realty rates data for debt and equity yields. The Institute posts daily and historical benchmark rates including treasuries, bank prime and LIBOR. Furthermore, interest rates are updated hourly by calling the Real Estate Capital RateLine at 7RE-CAPITAL (773-227-4825).

CONTACT:
Nat Zvislo, Research Director
The Real Estate Capital Institute
800-994-7324
director@reci.com
www.reci.com

For more information on this press release visit: http://www.releasewire.com/press-releases/release-3.htm

Chicago, Illinois -- (ReleaseWire) -- 01/26/2007 -- Borrowers feast on extremely competitive loans as lenders fund record amounts of debt in a highly competitive realty capital market. Rates, amortization schedules, prepayment provisions, good faith deposits and other traditional underwriting terms are liberally negotiated.

Creative lenders find unique methods of offering even more attractive terms and conditions. Some examples include:

• Collateral substitution rights – offered chiefly by balance-sheet lenders such as life insurance companies and banks.
• Tenant cancellation clause – acceptance of rent roll subject to cancellation, even if lease terms are at market price.
• Waiver of completion guarantees – if minimal construction needed as part of cash flow earnout.
• Prepayment flexibility – alternative to shorter-term bank debt deals. For example, a quarter-point rate premium buys par (or near par) pricing on a five-year deal.

John Oharenko, a member of the Advisory Board of the Real Estate Capital Institute, suggests "fierce bidding among lenders demands very creative solutions for structuring loans. Any underwriting advantage helps win deals above and beyond rate and term."

The Real Estate Capital Institute is a research organization dedicated to studying debt and equity markets for commercial properties in the United States. The Institute's website (www.reci.com) offers various information on fixed and floating rate debt pricing. Also, interest rate market updates are available on an hourly basis by calling the Real Estate Capital Rateline at 7RE-CAPITAL (773-227-4825.)

For more information on this press release visit: http://www.releasewire.com/press-releases/release-3.htm

Spreads below 100 basis points over treasuries more common for commercial mortgages.

Chicago, IL -- (ReleaseWire) -- 01/09/2007 -- Only a few years ago, mortgage spreads below 100 basis points over comparable-term treasuries were reserved for the highest quality, institutional-property loans. Such pricing required long-term, credit tenant occupancy and substantially conservative leverage of 65% or less.

Given today's competitive real estate capital markets, double-digit mortgage pricing is much more common. With default rates hovering within one percent or less, investors are more comfortable with real estate mortgage obligations as stable fixed-income investments. Such tight risk premiums offer borrowers access to tremendously attractive priced debt.

What's it take to tap into double-digit pricing? In general terms, the following underwriting parameters attract the lowest spreads:

1. permanent, non-recourse debt with a 10-year term
2. credit tenants with longer-term leases of 10 years or more preferred
3. major metropolitan market (unless a credit loan)
4. up to 75% leverage maximum
5. immediate funding of 90 days or less
6. larger loans of $5 million or more
7. single asset and portfolio acceptable
8. mortgage conduit loan execution more common; select life insurance companies/pension funds
9. conventional property types desired (e.g., multifamily, office, retail, and industrial), although nearly all property types will be considered at lower leverage levels
10. strong sponsorship with repeat business potential

Overall pricing for properties meeting most of the above mentioned parameters will range within the 70-to-100-basis-point arena. The low-end of this pricing range is reserved only for the finest funding opportunities, and should not be considered a "typical" spread.

According to John Oharenko, a volunteer member of the advisory group for the Real Estate Capital Institute, "Double-digit pricing is here to stay. Lenders have limited opportunities to fund high-quality assets in an effort to balance their portfolios."

The Real Estate Capital Institute independently researches various types of mortgage rates including spreads for different property types and grades. Property capitalization rates are also posted (www.RECI.com). Overall interest rates are broadcasted every day on an hourly basis by means of the Real Estate Capital Rateline at 7RE-CAPITAL (773-227-4825).

For more information on this press release visit: http://www.releasewire.com/press-releases/release-3.htm