Written by Dwight Bostic:

December’s Mission Monthly keynote article – ‘Importance of Due Diligence for Secondary Market Asset Sales’: reviewed the robust capabilities of the Secondary Market Surveillance (“SMS”) platform in providing permission-based portal access for all stakeholders in the loan evaluation process, streamlining due diligence by serving as a single repository for data management.

However, as with most technology based solutions/ platforms, the human element is critical to the success. Systems, in a singular capacity, are insufficient to address the tactical requirements of a successful engagement.To expand our capabilities, Mission Capital, in the 4th quarter of 2015, combined our services business with the due diligence firm Global Financial Review. The new entity, Mission Global, provides a comprehensive portfolio of due diligence and risk management services for institutions buying, selling, securitizing or managing mortgage, consumer and commercial loans. Mission Capital and Mission Global align human capital (with over 300 fulltime professionals) and advanced technology with a secondary market approach to meet your specific and demanding requirements.

Mission Capital and Mission Global support a broad range of business processes: Loan Syndication, Portfolio Acquisition and Disposition, Securitization, Warehouse Lending, Asset and Portfolio Management and Surveillance, Mergers and Acquisitions and Regulatory Reviews. This depth of experience along with the breadth of services offered allows Mission to deliver solutions to 7 of the top 10 banks along with engagements with the FDIC, various FHLBs and GSEs as well as numerous whole loan investors.

 

 

The following engagements demonstrate our extensive portfolio of services:

Top Five Major Global Bank: Mission is engaged by the Bank for both residential and commercial due diligence services. In support of the Bank’s multiyear, programmatic asset liquidation strategy for their residential portfolio, Mission acts as the Bank’s back office for all components of transaction management. Mission successfully imbedded over 100 full time professionals within the bank’s servicing operation conducting collateral file review and curative, vault management, title and lien curative along with managing post-closing contract management. In support of the Bank’s commercial group, Mission delivered due diligence and credit underwriting services for the acquisition of a credit facility secured by approximately $3bn of loans secured by more than 650 properties in Mexico. Due diligence included review of loan and credit files as well as third party work ordered in conjunction with the acquisition. Our deliverables, including market summaries for major cities and collateral types and individual asset summaries for all relationships, loans and collateral, were utilized by the Bank’s credit team in underwriting and approving the transaction.

Top Five US Bank: Engagement A supports the Bank’s warehouse lending group’s counterparty risk management through i) conducting loan level re-underwriting and compliance testing and ii) auditing servicing procedures for adherence to Bank and regulatory standards. Engagement B supports the capital markets programmatic RMBS Cleanup Calls and resulting whole loan liquidation. Services delivered are collateral exceptions curative along with preparation of a new assignment of mortgage from Bank. The transaction timeline is generally very compressed which require Mission to cure 1,500 to 3,000 executions within three to four weeks.

Leading Private Equity Firm: Mission supports the PE’s, one of the most active buyers of distressed residential whole loans over the past several years, whole loan acquisition and sales group delivering products for title and lien curative, compliance documentation cure and collateral documentation risk grading. Mission established a separate team of professionals dedicated to the specific and demanding needs of our client. Loan Originators – multiple asset classes: In support of new origination loan acquisitions by Conduit Originators, Mission performs loan level re-underwriting and applicable compliance testing for the following asset classes: Commercial Loans; Student Loans; QM and NonQM Residential Loans; and Community Reinvestment Act Loans. Mission Global and Mission Capital are uniquely positioned to partner with you on a variety of services to meet the complex challenges faced by all market participants. Mission Global is Rating Agency approved by S&P, Fitch, DBRS, and Kroll and both Mission Capital and Mission Global meet the demanding standards for vendor approval.

Click here to learn more about Mission Capital’s loan due diligence and consulting services.

 

FINANCIAL INSTITUTION CONSULTING DUE DILIGENCE, VALUATION, DATA, DOCUMENTATION

In addition to our leading asset sale and capital raising expertise, Mission Capital delivers custom solutions to our clients by leveraging our deep transactional experience, proprietary technology, subject matter expertise and best-in-class talent.

Residential/Consumer Expertise:

DUE DILIGENCE
Seasoned Loan Risk Analysis
Non-QM Reunderwriting
Agency Loan Reunderwriting
Forensic Reunderwriting
Compliance Testing/Risk Assessment
Data Review/Validation/Auditing
Robust Data Tape Construction
TRID/ATR Reviews
Valuation (Collateral/Loan/Portfolio)
Single Family Rental Re-Underwriting

AGENCY DELIVERY
Seasoned Loan Eligibility Analysis
Data Tape Creation and Validation
Bid Tape Submission (DF1, ULDD)
Agency Loan Reunderwriting
Collateral Delivery Management

COLLATERAL AND TITLE/LIEN SERVICES
Collateral File Review
Collateral Inventory / Exceptions Reporting
Collateral Risk Assessment
Cure Missing/Defective Docs
Lien/Title Risk Assessment
Title Policy Inventory Review
Cure Missing TP’s or Obtain New TP
Title Claims Management

Mission supports a range of business processes:
• Loan Syndication
• Portfolio Acquisition & Disposition
• Securitization
• Warehouse Lending
• Asset & Portfolio Management / Surveillance
• Mergers & Acquisitions
• Regulatory Review

WHOLE LOAN & MSR TRADE SUPPORT
Data Integrity Review and Data Cure
Pre-bid Risk Analysis
Portfolio Modeling/Valuation
Project Management/Planning
Project Manage Third-Party Vendors
Settlement Management/Reconciliation
Rep and Warrant Risk Management
Data Preparation and Mapping
Transfer Execution
Interim Servicing Reconciliation
Trailing/Missing Document Management
Corporate Advance Audit/Reconciliation

LOAN AND SERVICER SURVEILLANCE
Counter-party Risk Review
Workflow Analysis
Loss Mitigation Review
Policy and Procedure Review
Pay History Review
Validation of Servicing Efforts

 

Commercial Mortgage Loan/Lease Expertise:

DUE DILIGENCE
Market Analysis
Underwriting
Syndication Packages
Lease Abstracting
Asset Summary Generation
Data Tape Generation
CCAR Reviews
ARGUS Analysis
FDIC Loss Share Valuation/Terminations
Valuation (Collateral/Loan/Portfolio)
Market Analysis
Third Party Report Review/Auditing
Relationship, Loan, Collateral & Borrower Data Mapping

DOCUMENT MANAGEMENT
Collateral Inventory and Exception Reporting
Document Imaging and Indexing
Virtual Data Room Hosting

REGULATORY SUPPORT
Regulation Analysis
Process Assessments & Implementation
Data Review, Monitoring & Reporting
TRID, HMDA, DFA, ATR

EQUIPMENT LOAN AND LEASE ANALYSIS
Document Inventory
Portfolio Analysis
Credit Underwriting
Cash Flow Auditing
Spreading Financials
Warehouse Loan Facility Underwrite

THIRD PARTY OUTSOURCING / STAFFING SERVICES
Covenant Checks
Letter and Call Campaign for Financials
Multi-Lingual Capabilities

SMALL BALANCE BUSINESS / REAL ESTATE
One Loan/Multiple Collateral Analysis
Multi-Loan/Multi-Collateral Analysis
Robust Data Tape Generation

 

$55 Billion – Closed Asset Sale Volume

$495 Billion – Valuations Volume

$197 Billion – Closed Trade Support/Consulting Volume

MISSION’S KNOWLEDGE BASE SPANS THE LOAN AND REAL ESTATE CAPITAL MARKET LANDSCAPE:

ASSET TYPE – Debt, Mezzanine, Equity, Real Estate Portfolios, Collateralized Debt Obligations, Collateralized Loan/Lease Obligations

PERFORMANCE PROFILE – Performing, Sub-Performing, Non-Performing, Re-Performing, Bankruptcy, Seasoned RPL

COLLATERAL/TRANSACTION TYPE – Hospitality, Retail, Office, Industrial, Multifamily, Senior Living, Self-Storage, Student Housing, Manufactured Housing, Mixed-Use, Agriculture, Land, Equipment, Aviation/Marine, Single Family, SF Rental, Consumer, Unsecured, MSR, Student Loan, Non-QM

LESS-TRADITIONAL ASSETS – Quarries, Mineral Rights, Developmental Rights, Golf Courses

MISSION DELIVERS SOLUTIONS TO:

Banks – Community, Regional, Commercial, Investment

Funds – Private Equity, Credit, Debt, Opportunity

Credit Unions

Specialty Lenders – Bridge, Hard Money, Mortgage Reit

Insurance Companies

Special Servicers

Government – Regulators, FHLBs, GSEs, Federal Reserve

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ADVERTISING SUPPLEMENT TO CRAIN’S NEW YORK BUSINESS

REBNY Recap: The Year in Review

Given the hotly contested presidential election in November, 2016 was an eventful one for the country. The mood of the nation during the campaign affected New York City’s real estate market, by many accounts in the industry. Coupled with what some see as an oversupply of condos, co-ops and hotel rooms in the city, the market saw a slowdown in some areas, according to REBNY’s Statistical Abstract for 2016. Here are some highlights.

The Hotel Sector

The number of visitors, both from within the U.S. and overseas, has inched up since last year. That has made for a hotel sector where inventory has ticked up to accommodate increased tourism. REBNY’s Statistical Abstract found that upscale and mid-priced hotels are averaging the highest occupancy rates, however, with luxury hotels seeing a decline from 2015. The average daily room rate for luxury hotels was just over $400, with room rates for upscale hotels averaging over $200 and for mid-price hotels just under $200.

Jerry Swartz, the senior partner and founder of HKS Capital Partners, a real estate capital advisory firm, has found financing for hotel deals scarce. “Hotels are on the low end of the wish list of lenders right now,” said Swartz. “It’s very difficult to get them done.”

For completed hotels that have been operating for less than a year, the sources of financing tend to be hedge funds, equity funds or opportunity funds, he said. When hotels have been operating for at least a year, conventional lenders are an option, he says.

Swartz isn’t alone. “In New York City, we are definitely seeing fewer hotel financings,” said Ari Hirt, managing director of debt and equity financing for Mission Capital Advisors, a diversified real estate capital markets solutions firm headquartered in New York City.

One reason is the law of supply and demand. “There was concern about the supply of hotel rooms in New York and about the number of hotels coming online,” said Hirt. “While lenders are concerned about [supply] in New York. I don’t believe they need to be as concerned. New York has always absorbed whatever it has built—apartments, hotels.”

Hotels being built today tend to be affordable hotels, such as Holiday Inns and Hampton Inns, said Slattery. “We’re not building more Waldorf Astorias,” said Slattery.

Eric Margules, president of real estate investment firm Margules Properties in Manhattan, has found that banks are getting stricter with their lending requirements for his multifamily, office and retail projects.

“Things that were not a problem a year or two ago are all of a sudden problems,” said Margules, whose deals are typically in the $10-$20 million dollar range. “Banks are looking for deposit relationships, security accounts, any kind of money they can get deposited. They are much more insistent than they used to be.”

Margules is not alone in finding that New York City’s real estate market is changing. Many in the development and financing realms are finding their projects affected by the recent interest-rate hike by the Federal Reserve, which raised its federal funds range by .5% to .75% in a unanimous vote Dec. 14. The hike has given rise to an increase in nonbank lending and a slowdown in construction lending. But many anticipate that the recent election of Donald Trump as president may counterbalance this, ushering in a more relaxed regulatory climate and increased mortgage lending.

At the moment, the interest-rate hike is already affecting many in both residential and commercial real estate, with the boroughs outside of Manhattan hit hardest.

Manhattan has in recent years dominated housing starts in New York City and was home to 68% of the value of new construction starts in New York City in the first nine months of 2016, according to a New York Building Congress analysis of construction data from Dodge Data & Analytics. For the five-year period spanning 2011-2015, Brooklyn and Queens were each home to 16% of the value of new construction starts — and the percentages were about the same in 2016. The Bronx accounted for 6% of the value and Staten Island 4%.

David Shorenstein, principal of Silvershore Properties, which invests in multifamily buildings in Brooklyn, Manhattan and Queens, has seen deals taking an extra month to six weeks to close since the increase.

“It’s definitely slower,” said Shorenstein. “Everything is moving at a slower pace. Sometimes the rate will go up in the middle of a deal and delay it.”

To finance acquisitions of vacant buildings in Brooklyn, Manhattan and Queens, Shorenstein has been turning to hard-money lenders, rather than banks, securing financing in the 9% to 12% interest rate range. “The only loans you get are high-interest-rate loans where you have to fund the entire business plan at acquisition,” he said.

Similarly, Ari Hirt, managing director of debt and equity financing at Mission Capital Advisors, a diversified real estate capital markets solutions firm headquartered in New York City, has found that on both short-term, floating-rate deals and long-term deals, there has been an increase in interest rates. That has had implications for projects in the area.

“In New York City, we’re seeing a pullback in construction financing,” said Hirt. “There aren’t as many lenders that are lending for new construction. Particularly on the bank side, there has been a reduction in leverage due to regulations but nonbank lenders are filling in some of that space, especially for well- conceived projects with good sponsors.”

The pullback is particularly pronounced, he said, in the construction of higher-end condos. “There is concern about how many buyers there are for high-ticket luxury condos,” said Hirt.

Ayush Kapahi, principal and founding partner of real estate finance firm HKS Capital, has also turned to nonbank lenders, paring them with banks, in the current climate.

“We just closed out a very large construction loan when everyone has been saying over the last 12 months [construction is] dead,” said Kapahi. The $150 million, nonrecourse loan was made to the private developer of a 467-unit,multifamily rental building in Long Island City. It was one of a number of such loans closed in recent months, he said.

However, the lender, in this case, was not a bank. It was an insurance company—and not the only one active in the market.

“Debt funds are effectively filling the gap where other institutions are having a tough time swallowing a leverage level or when banks believe they have too much exposure in a specific asset class,” said Kapahi.

In what has proved to be a very liquid environment “you don’t know who is going to win what deal, based on their appetite for risk,” Kapahi said.

Not all developers are finding their situation changing, however. “I just closed a $3 million loan at 3.25%. It wasn’t too complicated,” said Mitchel Maidman, president of Townhouse Management, which owns 70 residential and commercial buildings in New York City. The deal was for a 17-unit walkup on the Upper East Side.

And some players on the local real estate market, like Leonard Strindberg, are optimistic about what rising interest rates bode for the city’s real estate market. Strindberg is president of Compass, a Manhattan firm that specializes in the marketing of high-end New York real estate.

“When interest rates rise, they usually indicate a strengthening economy,” said Strindberg. “When you look at the average interest rates, the interest rate for a 30-year mortgage is the equivalent of April 2014—a very strong real estate market. We know real estate markets have done very well with this level of interest rates.”

Strindberg and other observers are also optimistic about what Trump’s policies will mean for New York City real estate. Trump’s transition team has said it will work to dismantle the Dodd-Frank Act, which has been blamed by critics for stifling lending. “Regulation may be reduced,” said Strindberg.

According to Strindberg, some of the Dodd-Frank Act have imposed cumbersome requirements that don’t make sense in obtaining a mortgage. “If you open up the ability for people to get mortgages that could be spectacularly effective in boosting first-time home buyers,” he said. “Easing the Dodd-Frank regulations will be a mammoth injection in the real estate market.” Right now, however, many will be waiting to see what Trump does in his first 100 days before predicting what is to come.

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Source: Commercial Mortgage Alert

A partnership is seeking to refinance a $113 million mortgage on the leasehold interest in Midtown Manhattan’s Lipstick Building. The 635,000-square-foot structure, at 885 Third Avenue, is owned by IRSA, which is controlled by the Elsztain family of Argentina, and Marciano Investment of Beverly Hills. The partnership is seeking an unspecified amount above the existing loan’s balance, with the excess used for various costs, including capital and leasing expenditures. It’s unclear whether a fixed or floating rate is preferred. Mission Capital is the partnership’s advisor. The 34-story building, between East 53rd and East 54th Streets on the east side of Third Avenue, has a red-granite face and an oval shape whose three layers resemble an open lipstick tube. The lead tenant, law firm Latham & Watkins, occupies 409,000 sf. [Read more by visiting Commercial Mortgage Alert] [Download PDF here]

Loan Sought on Lipstick Building

A partnership is seeking to refinance a $113 million mortgage on the leasehold interest in Midtown Manhattan’s Lipstick Building.

The 635,000-square-foot structure, at 885 Third Avenue, is owned by IRSA, which is controlled by the Elsztain family of Argentina, and Marciano Investment of Beverly Hills.

The partnership is seeking an unspecified amount above the existing loan’s balance, with the excess used for various costs, including capital and leasing expenditures. It’s unclear whether a fixed or floating rate is preferred. Mission Capital is the partnership’s advisor.

The 34-story building, between East 53rd and East 54th Streets on the east side of Third Avenue, has a red-granite face and an oval shape whose three layers resemble an open lipstick tube. The lead tenant, law firm Latham & Watkins, occupies 409,000 sf.

The Class-A tower, in the Midtown/Plaza District, was built in 1986 by Houston-based Hines and Sterling Equities of New York. In 2004, the duo sold the property to a Tishman Speyer partnership for $235 million.

In 2007, the Tishman group divided the ownership of the structure and the underlying land, selling the pieces in separate transactions. A group of foreign investors, led by investor Haim Revah, acquired the leasehold interest for $606.8 million.

Reva’s partners included IRSA, Marciano and Israeli shops Tao Tsuot and Financial Levers. In 2011, IRSA and Marciano gained control of the leasehold interest in conjunction with a recapitalization.

Also in 2007, the Tishman team sold the land to a partner ship between SL Green Realty of New York and SL Green spinoff Gramercy Capital for $317 million. In 2010, SL Green bought out Gramercy’s position. Last February, SL Green sold the underlying land to a joint venture between Shanghai Municipal of China and Ceruzzi Properties of Fairfield, Conn., for $453 million.

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Source: Commercial Real Estate Direct

PCCP LLC has provided $50.8 million of senior financing against the Commons, a 304-room hotel in Minneapolis. The financing, which was arranged by Mission Capital Advisors, will allow the full-service hotel’s owner, AJ Capital Partners of Chicago, to renovate the 31-year-old property, reposition and rebrand it the Graduate.

Thursday, 12 January 2017

PCCP Lends $50.8Mln Against Minneapolis Hotel

PCCP LLC has provided $50.8 million of senior financing against the Commons, a 304-room hotel in Minneapolis.

The financing, which was arranged by Mission Capital Advisors, will allow the full-service hotel’s owner, AJ Capital Partners of Chicago, to renovate the 31-year-old property, reposition and rebrand it the Graduate. AJ, which stands for Adventurous Journeys, purchased the property, at 615 Washington Ave., earlier this month from RockBridge Capital, which invested some $15 million on upgrades just four years ago.

AJ’s Graduate brand caters to college and university markets. The Commons sits within the main campus of the University of Minnesota and a couple of blocks from TCF Bank Stadium, the home of the Minnesota Vikings professional football team, and Mariucci Arena, home of the Minnesota Golden Gophers, the university’s ice hockey team.

The property’s repositioning is slated to be completed by late this year. AJ plans to replace flooring and wall coverings, furniture and signage. The hotel includes a full-service restaurant, the Beacon Public House, 20,000 square feet of meeting space, fitness and business centers, and access to the college’s recreation and wellness center. It also includes three commercial spaces that are leased to Applebee’s and Starbucks and has tunnel access to the McNamara Alumni/Conference Center and University Medical Center.

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Source: Travel and Tour World

Clemson hotel to receive $1.5 million renovation

Published on Tuesday, January 10, 2017

The owners of a certain business hotel in Clemson claimed that it is on its way to get a major renovation.

Last week, the Mission Capital Advisors declared that it has arranged$12.9 million in financing for Midas Hospitality. This includes $1.5 million for updating the 110-room Courtyard by Marriott Property. The remaining part of the money would be utilized for refinancing the existing debt on the property, as asserted by the Mission.

Kurt Furlong who is the executive vice president and principal for marketing and sales with Midas said that the courtyard of the hotel is over 7 years old and it does look impressive.

Moreover, it even looks up-to-date for the following five to seven years. Clemson is a great market, he feels and he has also said that the very outlook of the hotel here reflects healthy demand.

Kade Herrick, the tourism director for the Clemson Area Chamber of Commerce was happy with the announcement of the renovation. He said that Clemson hotels regularly sell out for football weekends and also the busy competition and rowing training season between February and April.

Herrick said that during their peak season, they witness quite a heavy demand.

Herrick also said that the University Inn and its 149 rooms and also the meeting spaces are back online following the expensive rift. These rooms, along with the new 80 or 90 rooms that are expected from Patrick Square hotels and Abernathy are currently under construction.

The work on the Courtyard would commence later this year. It would comprise renovations for the lobby, guest rooms and the fitness center. No additional rooms are expected. St. Louis-based Midas operates 27 hotels in as many as 11 states including Starwood, Marriott, IHG and Hilton.

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Source: Crain's

The owners of Essex Inn landed a $170 million construction loan to upgrade the hotel across from Grant Park and build a 56-story apartment tower alongside it.

January 03, 2017

$170 million loan for Essex upgrade, apartment tower

By RYAN ORI

The owners of Essex Inn landed a $170 million construction loan to upgrade the hotel across from Grant Park and build a 56-story apartment tower alongside it.

Chicago-based Oxford Capital Group and its investment partner, private-equity firm Quadrum Global, today announced the loan, which they said will kick off construction of the 479-unit luxury apartment tower in the South Loop.

The venture bought the 254-room hotel at 800 S. Michigan Ave. in 2014 and in 2015 unveiled plans to add apartments along the south side of the hotel. The city approved the development plan last year.

The hotel will be renamed the Hotel Essex, expanded to 271 rooms and upgraded to a “luxury lifestyle hotel” by 2019, according to the developers’ statement. They did not identify the lender, which was described as “a global investment bank,” or the anticipated total cost of the project.

New York-based Mission Capital Advisors represented the Oxford venture in obtaining the debt.

Crews began putting up scaffolding today, as they prepare the demolish the parking garage on the site where the apartment tower will be constructed, Oxford founder, president and CEO John Rutledge said. Demolition will be completed within six weeks, followed immediately by construction work, he said.

The hotel renovations, slated to start in late 2018, will be completed at the same time as the Essex on the Park apartment building opens. Apartments will have high-end finishes, and the new Hartshorne Plunkard Architecture-designed building will include a multistory winter garden with an indoor pool, hot tub and other amenities, according to the developers.

Planned construction of the apartment tower comes amid concerns of a potential glut of new units as downtown experiences a construction boom.

“We have long been believers in the desirability and irreplaceability of Michigan Avenue real estate in Chicago,” Rutledge said in the statement. “This is particularly true of real estate directly on the park and the lakefront, where residents have beautiful and unencumbered views and open space in perpetuity.”

Oxford and Quadrum have partnered on other hotel developments in Chicago, including the Godfrey Hotel and the ongoing conversion of a vacant building at 168 N. Michigan to a hotel.

Oxford’s other Chicago developments have included the conversion of a former office building at 360 N. Michigan Ave. to the LondonHouse, as well as the Langham and Felix hotels.

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