The Failure of CRE Investment Loss Mitigation in the Analytics Age

More than $500 billion in CRE loans and investments are expected to be realized this year, worldwide.  That’s an astounding number.  CRE investment loss mitigation practices have not proven to be up to the task (otherwise, the losses would be a lot less, wouldn’t they?).  … More The Failure of CRE Investment Loss Mitigation in the Analytics Age

The Emperor Clothes: Credit Risk Underwriting

Credit risk underwriting has become an extraordinarily complicated process for business lending and investment.  Books have been written about it.  Banks spend fortunes on trying to manage it.  Everyone in finance has been taught the importance of it and yet it remains a pivotal element in the search for the Holy Grail – the reduction of investment/loan loss severity risk. … More The Emperor Clothes: Credit Risk Underwriting

Can You Sell Your House To The Bank & A Buyer At The Same Time & Still Own It?

Under the modified entry-fee approach there is a guarantee of access to care but no guarantee of cost containment.  The monthly fee will change over time but the resident gets to remain on the property as care needs change.  This is crucial because the adult children would rather sleep with rattlesnakes than move an elder.  It also creates an incredible profit-taking opportunity because we can use sophisticated capital structuring approaches to the contract structure that give the resident real control over their future estate (i.e.: receiving up to 99% of their entry fee upon leaving the community and the next resident taking possession of their living unit) and giving the developer the opportunity to generate tremendous yields before the property even commences operations.  … More Can You Sell Your House To The Bank & A Buyer At The Same Time & Still Own It?

An End to Relevancy: Credit Reporting & Risk Management in CRE Transactions

Real-time market event reporting provides the logical alternative solution to the inherent shortcomings of credit risk management practices that focus on subjective decision-making criteria in light of data pertaining to the conditions and events that would drive detrimental credit outcomes.  In short: you now have the choice of addressing the cause or the effect, which makes better sense to you? … More An End to Relevancy: Credit Reporting & Risk Management in CRE Transactions

Picking Up The Clean End Of The Turd: FannieMae & CIRT

Any insurance expert will be happy to tell you that someone will be happy to help insulate you from the consequences of your decisions for an even greater fee.  The reality remains that spreading risk across a greater base of risk-takers is no substitute for preventing the risk from occurring in the first place.  CRE transactions require proactive risk management and proactive risk mitigation measures that follow the transactions over the course of the full term of the investment holding period.  Valuation, feasibility analysis of market opportunity, underwriting analyses and due diligence reviews that are limited to the pre-closing funding period are just not going to cut the mustard.  In today’s world there is going to be no substitute for continuous, real-time monitoring of the risks that can contribute to future asset obsolescence and result in greater investment loss severity risk. … More Picking Up The Clean End Of The Turd: FannieMae & CIRT