Going Proactive to Manage Investment Loss Severity Risk in Commercial Real Estate

he promise of artificial intelligence has allowed our firm to realize the means to provide proactive forecasting based on the only thing that matters – what is happening right now in the near-term future in a commercial real estate property’s local market in terms of advancements in technology and innovations that create the conditions that lead to declining performance and asset obsolescence with the potential for foreclosure and bankruptcy petitions being mitigated before they have the opportunity to become a real issue.  This approach allows us to support an investment for the full term of the asset holding period and the cost is peanuts both in terms of its relative cost to the transaction itself (less than 1.5% over a 10-year subscription period) and in terms of the costs associated with investment loss severity risk that apply in its absence. … More Going Proactive to Manage Investment Loss Severity Risk in Commercial Real Estate

High Volatility Commercial Real Estate Loans

High Volatility Commercial Real Estate (HVCRE) loans represented a potential problem for the banking industry.  Under the Basel III international banking accord and the Dodd-Frank Wall Street Reform Act, HVCRE loans are new construction and development financing loans so classified if their loan-to-value (LTV) ratio is in excess of the Supervisory Loan-To-Value (SLTV) ratio set by the relevant commercial banking authority in the U.S. (or respective country in the case of Basel III).  The issue is the loss severity risk exposure that has habitually attended loans for commercial real estate development projects (called “ADC” – as in “Acquisition, Development & Construction” loans).  ADC loans represent a special class of risk due to the nature of the operations taking place – development and construction being the issue, as these are complex operations that have the potential for loss due to cost overruns and delays caused by a variety of risks that have been heretofore difficult to manage. … More High Volatility Commercial Real Estate Loans

Investment Loss Severity Risk Prevention & Mitigation in Real-Time

Commercial real estate equity securities private placement offerings provide potential rewards but come with significant loss severity risk that calls for prevention and risk mitigation support in a real-time environment.  The question is whether or not we want to fix the barn door after the horse is gone or before the horse is gone.  Investment loss severity risk mitigation programs typically focus on analytics to answer the question of what will become a future loss based on what has already become a loss.  … More Investment Loss Severity Risk Prevention & Mitigation in Real-Time

CRE Investment Loss Prevention: Time for a Plan?

Yes, it is the end of the month and we are facing the reality of having to make the monthly report and put lipstick on the pig.  CRE investment losses are as real as death and taxes but an opportunity exists for a different outcome. The opportunity comes in the form of market analysis and … More CRE Investment Loss Prevention: Time for a Plan?

Acquisition, Development & Construction (ADC) Commercial Real Estate Financing Emerging Trend

The emerging trend that supports the use of the equity credit is a collateralization of the ownership interests in a flexible pool funding structure to cover calls on failures and providing the most important portion of the liquidity pie – equity capital for at-risk investment.  This provides the portfolio owner with yet another level of economic return opportunity that was not previously contemplated and the developer/sponsor with the capital to move a project from pre-construction into active construction phase development. … More Acquisition, Development & Construction (ADC) Commercial Real Estate Financing Emerging Trend

The One Thing in CRE Project Financing

Budgeting working capital has to be on a cash accounting basis and has to take into account the velocity of money in and out of the business over the accounting cycle (maybe I should be an accountant, that sure sounds like one talking).  When undertaking a securities private placement offering it is considered bad form to go raise the funds and then have to come back a few months later and say you need more because the business operations are out of operating capital.  My experience has shown these conversations are not generally well received and the consequences are not fun for anyone. … More The One Thing in CRE Project Financing

What’s Really Fungible in Today’s Markets?

UFT Commercial Finance has taken credit to a whole new level within the commercial real estate (CRE) finance global marketplace.  The outcome is a systemic approach to leveraging CRE equity in a way that produces whole new pools of capital for ADC financing and disposition financing that provides a whole new layer of opportunity to generate still more earnings for those holding portfolios of CRE properties in a way that really makes sense.  The outcome is likely to do for CRE what FannieMae has done for multifamily housing but without the bubbles that FannieMae seems to help create on a continual basis. … More What’s Really Fungible in Today’s Markets?

The Challenge of Launching Global CRE Lending

The problem is information.  Believe it or not our market analysis has found that census-taking outside the U.S. is spotty and non-existent in many parts of the world.  There are countries that have limited resources so they have incomplete information compared to what we enjoy here in the U.S. and there are countries, that for the purposes of political expediency, don’t want anyone to know the information.  In either case, they are really hurting themselves.   … More The Challenge of Launching Global CRE Lending

Got Tech? Time to Cash In & Get Capital!

The same principles have to apply and yet the environment is completely different in the IT world to that of commercial real estate.  The challenges relating to detecting market disruptions caused by advances in technology and innovations are most acutely experienced in the IT segment and this represents a special challenge for investors and lenders seeking to reduce their risk of loss due to these issues.  IT also represents the biggest and hardest potential test for the INVIZEN program and we are hitting this challenge head-on. … More Got Tech? Time to Cash In & Get Capital!