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Real Estate Bisnow
The largest commercial real estate publication in the United States.
January 12, 2012 

Hitting $1 Billion
With Baby Steps

Our big time LA State of the Market is coming, Jan. 25 See our preview with PCCP founder Bill Lindsay below, then sign up today!

PCCP did about $500M in loans last year, and founding partner Bill Lindsay expects the firm to do at least $750M this year. Yet it's taking small bites, making medium-term, floating-rate loans between $25M and $50M, primarily on value-added real estate nationwide. We chatted with Bill, who'll be a panelist at Bisnow’s second LA State of the Market, Jan. 25 at the Four Seasons Hotel Beverly Hills. (Sign up!)
The loans usually involve some kind of recapitalization of the real estate at the same time. On the equity side, PCCP is providing rescue capital in situations where lenders are taking discounted payoffs or there’s an asset-level recapitalization. PCCP recently bought a mezz loan on a San Francisco office building, making a deal with the borrower to convert it into equity. The borrower retained an interest in the real estate and PCCP essentially acquired title at a discount to its value in the open market. Besides an increased volume of loans, Bill’s racking up frequent flier points. Last year he managed to make it to Korea, China, Abu Dhabi, Kuwait, Qatar, Bosnia, Croatia, and Montenegro—all to visit investors (except for Bosnia). “I set a world record for travel last year, and I’m hoping that I won’t exceed it this year.” (Signing up for our event sounds like a great use of your time.)

Yesterday at JLL’s LA Forecast 2012, we snapped this of Roger Staubach, who tossed some pigskins from the stage to a few lucky winners in the audience. Speaking of winners, JLL’s forecast calls for continued firming in the LA office market this year and rental growth in 2013, with the Westside seeing the highest asking rates for obvious reasons. (You know: ocean, media, tech, entertainment.) Meanwhile, the LA industrial market will continue a slow march to recovery and retail will stabilize pending improvement in unemployment. Multifamily will continue to perform well between’12 and ’14—rents have begun to increase, despite more construction taking place—and hotels will see single-digit RevPAR growth this year.
Featured speaker Tim Leiweke talked about AEG’s plans for Farmers Field and efforts to lure an NFL team (maybe even two). And the economics they’ll bring through increased retail, restaurants, nightlife, office towers, and hotel rooms—and using that economic upside to find $300M to fix our Convention Center. “The whole buzz of Downtown Los Angeles changes because we’re 24/7.” He predicts Angelenos will be cheering for their very own team in a temporary venue like the Rose Bowl, Coliseum, or even Dodger Stadium by 2015, and in a permanent site—Farmers Field or Ed Roski’s competing project in City of Industry—by ’16 or ’17 at the latest.

We also caught up with JLL’s new West Coast power couple. Peter Belisle, who ran JLL’s energy and sustainability services practice nationally, was named market director for the Southwest region, while former market director Jan Pope has been named head of corporate solutions’ West region. Jan tells us the change is to provide more service to JLL’s clients on the West Coast and “gives us more depth here.” For Peter, it’s a homecoming of sorts: Most of his career has been spent in SoCal, and he’s looking forward to “being involved on a more local basis.”

We visited CREW-LA’s first program of the year (co-sponsored with CCIM and CRE) on commercial lending yesterday at the Millennium Biltmore Hotel. The panel: Wells Fargo’s Bill Harvey, real estate attorney Sarah Spyksma, CBRE’s Darlene Hayes, moderator Linda Morgan of US Bank, George Smith Partners’ Steve Bram, and KW Commercial Investment Group’s Joan Kramer, with CREW-LA 2012 president Trudi Lesser. In a “save the date” announcement, Trudi notes that eight chapters from the Golden State will be arriving in Downtown LA for CREW’s California Conference, April 19-21.
According to Steve, the most active lenders today are life insurance companies, commercial banks, and CMBS, with the latter giving the largest loan amounts for 10-year, fixed-rate terms on a non-recourse basis. Banks generally want recourse, and that’s why many clients don’t like to do business with them. But once you enter into a relationship, the banks are very easy to work with on subsequent deals.
The gang's all here. (Actually, it's CREW-LA's board.) One of the challenges is that if a potential borrower has CMBS loan in special servicing, a lender may not even get a call back from the special servicer. Darlene, an appraiser, adds that if a property is in special servicing, you probably have an uncooperative borrower and you won’t get operating information. You’re forced to rely on the market, which is essentially a fee-simple approach. Sarah notes that pre-crisis, borrowers were given the benefit of the doubt. Today, more lenders are requiring lock-box arrangements, cash management agreements, and approval of budgets.
Show us the money! Julie@bisnow.com.
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