Four Finance Facts for 2014
The numbers game is a hard one (though not as hard as a triple Salchow). Some words to live by this year:
1) CMBS will be bigger
Mission Capital’s David Tobin, whom we snapped in his company's 32 Ave of the Americas office, led his firm to a $4B year in 2013, supported by an expansion of its debt and equity finance group to the West Coast and a large increase in transactions from its residential group. In 2014, expect an increase in CMBS volume, say Mission originations ace Jordan Ray and execution expert Ari Hirt (below).
2) Banks are leaving their nests
The debt and equity team recently secured a $13M preferred equity investment for a Westchester shopping center and also is drumming up business by helping borrowers access off-the-radar banks (often from Mission's loan sale biz). They secured a $38.5M non-recourse construction loan from a NY-based lender for Miami's Garden Hotel South Beach and arranged a $44.4M non-recourse construction loan from a NY-based mezz lender and foreign bank for Chicago's Soho House.
3) Secondary markets’ day is coming
Investment funds are just realizing they’ve got to go to secondary markets to get returns, Atalanta Advisors' Annu Chopra tells us, but there’s a time gap between that revelation and closing deals. Now that investors are taking those meetings, deals will start finalizing in secondary markets in Q2. She equates this part of the cycle to Q3 ’11, when investors started paying attention to development opps; deals, though, didn’t close until Q2 and Q3 2012.
4) Investors want to write bigger checks
Annu and Rachel Gilbert Solomon (above) say discretionary funds are racing to deploy existing capital so they can take advantage of the slowly improving climate for raising fresh capital. Those that were investing in $10M chunks want $15M or $20M deals (at typical LTVs, that’s a $70M deal), and $15M investors want $30M opportunities. That means it’s harder to find private equity partners for smaller deals, but for those willing to buy in on the low side, there’s less competition.