Commercial real estate (CRE) loan loss and investment loss reduction now requires us to consider market estimates and forecasts more than ever to prevent loan loss severity risk from getting out of control in a hot CRE investment climate. The loan loss market issues seemingly drive all other factors. In a market economy, as long as there is a future revenue opportunity for a given local trade area of a CRE property business, there is a high probability that all other default event conditions can be made, more or less, controllable, so the revenue opportunity truly is at the root of the loan loss conundrum. The adoption of the CECL methodology for combating loan loss is creating a strong pressure on banks to build there loss reserves to offset an expected $246 billion loss risk expectation that FASB compliance may end up requiring by 2020.
The CECL methodology directly addresses the issues that concern the FDIC, OCC and other regulatory agencies most about CRE financings – the risk of a local market failure by a property that is due to the extended holding period the securities usually require. This fundamental issue requires a proactive approach that current PD modeling does not easily incorporate. Indeed, a definitive argument shows these analytical approaches to computing loss exposure may amount to the cold comfort of having swept out the bad apples in the barrel when we swept out the good apples along with them. The impact on earnings, share value, reserves and dividends is almost incalculable.
INVIZEN offers the pathway forward to making CECL work for the finance industry in a way that serves the need to provide investment performance assurance in a way that makes sense and cannot help but work because it is based upon the principles that already support the commercial real estate investment industry and it is affordable.
NNN property due diligence requires more of us now than just verifying the lease and making a guess about subjective measures such as “tenant quality”. Sears, ToysRUs, Caldor – the list goes way back in time and yet the losses have continued.
INVIZEN offers the only end-to-end solution specifically-designed to help end loan and investment losses in CRE securities private placement offerings by addressing the totality of the underwriting and due diligence issues in a real-time, proactive environment that only gets started with pre-closing due diligence. The INVIZEN RTS program is designed to help prevent the key risks from becoming future asset impairment problems while also proactively managing and/or deterring investment fraud, management performance and foreclosure default event exposure. To these benefits we also add the support necessary to help prevent falling into the HVCRE trap that has stymied the commercial real estate finance vertical.
Currently, the asset classes supported by the INVIZEN RTS program include the following commercial real estate specific intended-use scenarios:
- Multifamily Rental Class “A”
- Multifamily Rental Class “B”
- Multifamily Rental Class “C”
- Multifamily Age-Restricted Rental Senior Housing
- Multifamily Rental Independent Living Facility Senior Housing
- Multifamily Rental Assisted Living Facility Senior Housing
- Multifamily Rental Alzheimer’s Assisted Living Facility Senior Housing
- Multifamily Rental Congregate Care Senior Housing
- Multifamily Continuing Care Retirement Community (CCRC) Senior Housing
- Commercial In-Line Retail
- Commercial Single-Tenant (Retail/Commercial/Healthcare Sub-Scenarios)
- Commercial Enclosed Retail
- Commercial Mixed-Use Retail
- Commercial Office Class “A”
- Commercial Office Class “B”
- Commercial Office Class “C”
- Commercial Light Industrial Flexspace
- Commercial Distribution Facility
- Commercial Mini-Storage
- Hospitality – Resort Class
- Hospitality – Full Service Class
- Hospitality – Limited Service Class
- Hospitality – Value Class
Find out about this dramatic solution available today in the CRE finance vertical that addresses both pre-funding buy-side/sell-side due diligence and underwriting issues, as well as the post-funding environment where the only thing that counts is investment performance assurance and what it costs to sustain it. Talk to an INVIZEN representative at 832.663.9634.