Mission actively makes a market in whole loan single family pools arising from legacy securitization collapses (securitization collapse loan sales). At the same moment that interest rates have gapped out and new single family origination volumes have dried up, demand for these seasoned performing loans has never been stronger. Regional and community banks that hold single family loans on balance sheets have contributed to this inexhaustible appetite for a number of reasons:
– Unprecedented liquidity resulting from slack commercial loan demand, unused PPP funds, elevated post-COVID payoffs and an overall flight to the safe haven of the United States.
– Low commercial loan margins due to spread compression and competition between lenders.
– Unexpectedly strong bank credit metrics, high GDP growth and economic activity.
Typically, these single family pools have similar characteristics:
– They consist of performing loans originated prior to the financial crisis.
– They exhibit slow prepayments for varying reasons, including HAMP balances, prior delinquency, property condition or unappealingly small unpaid principal balances
– They live in securitizations that have substantial realized losses.
– They have limited compliance risk.
Harvesting these pools is a complex process, involving the cooperation of call right holders, trustees, servicers, collateral custodians, bondholders and MSR owners. Completed transactions resemble landing multiple planes almost simultaneously during rush hour but occasionally the process resembles herding cats.
Mission’s securitization collapse loan sale process navigates these hurdles and produces maximum recoveries for all constituencies involved and eliminates the administrative, reporting and servicing burden of odd lot securitizations. With housing price appreciation still strong, it’s an opportune time to price and sell these portfolios.
Up, down or sideways? What’s happening in Manhattan’s world famous SoHo neighborhood? Are rents going down? Watch to learn about the trends we see developing right now in the high-end boutique leasing market. Share this with anyone who follows Manhattan real estate.
Real estate nerds like me love a great site tour. And there are no better sites to tour than High Street retail in markets like San Francisco, Santa Monica and New York City. While Manhattan sub-market rents in Meatpacking and Bleecker Street appear to be permanently lower, one market that is demonstrating resilience is the Soho District of Manhattan. The key high-end boutique corridor in SoHo is Mercer Street, home to the Mercer Hotel, the Fanelli Cafe, & many cutting edge boutiques.
Last dollar psf debt loads on certain retail condominiums in Soho have approached $4000 to $5000 per square foot. Because of this, we have seen a number of sub and non-performing loans secured by retail condominiums trade in the secondary market, particularly cash out refinance loans predicated on rents between $500 psf and $750 psf.
We walked on Mercer Street corridor to figure out what is fantasy and what is reality in the post Covid leasing market.
In addition to following reported leases, one way to read the tea leaves is to read the construction permits posted on the front of buildings undergoing retail tenant improvements.
Recent leasing activity includes Softbank-backed Vuori, a take on LuluLemon, with 6,000 sf at 95 Mercer and a new build out of an existing boutique by Tory Burch. Additionally, we were able to identify at least four more spaces that have been leased and are under construction totaling nearly 22,000 sf.
49 Mercer- 7,750sf – signed July 2021 -no rent or tenant listed
53 Mercer- 6,100sf – signed sep 2021 – $225 PSF – F.P Journe – 10 years
77 Mercer- 5,100sf – signed December 2021 – no rent or tenant listed
149 Mercer- 3,600sf – Signed Feb 2022 – no rent or tenant listed
These include 49 Mercer, 53 Mercer, 77 Mercer, 149 Mercer.
The reported rents on these new leases range from around $250 per square foot to north of $500 per square foot.
At the same time however, we noted signs advertising active pop-up retail leasing opportunities.
Retail is very block-specific in Soho so it remains to be seen whether the consensus rent in the $250 per square foot range becomes the norm or if key spaces continue to touch $500 psf. One factor is clear, basements don’t necessarily count anymore toward the headline rent per square foot figure.
Look for our compare and contrast analysis of occupancy on a block-by-block store-by-store basis from summer 2021 to summer 2022. We will try to figure out the macro trends in this micromarket.
Accurate loan valuation and pricing is critical for many reasons:
1. It sets expectations appropriately between buyers and sellers and allows for objective evaluation of whole loan bids
2. It properly sets PCI marks, reserves against impaired loans and allows for a release of reserves when the opportunity presents itself.
3. It is critical for mergers and acquisitions and loan portfolio investment decisions.
4. …and It ensures accurate movement of loans into a held for sale status
Model complexity, however, doesn’t enhance reliability. Pricing accuracy increases for three basic reasons:
1. The volume and frequency of loans and portfolios priced, including large data set evaluations for entities like the FDIC, FHLBs and HUD
2. Using Transaction Tracker intelligence to triangulate recent actual note sale results against financial reporting and publicly available data in an opaque marketplace
3. Marking to market collateral values in real time
Accurate qualitative data from comparable loan sale, investment sale, and financing transactions properly validates quantitative financial models. This guards against confirmation bias that occurs when flexing sensitive model assumptions that can exaggerate model outcomes.
What does this mean for loan portfolios? In 2022, regulators expect CARES Act 4013 designated loans to either return to the line or be properly risk rated as a TDR. Understanding true loan value for these assets in an opaque, fast paced and volatile marketplace can mean the difference between booking gains or incurring losses on difficult to price assets. PCI loans marked before or during COVID very often have embedded gains that should be monetized at high water mark pricing. As the Fed finally begins its tapering, selling risk into frothy markets at or above intrinsic value will be a winning strategy for 2022.
Pricing for Seasoned Performing Loans with David Tobin, Senior Managing Director
New Video
One of the most impressive characteristics of the recent surge in fixed income assets is how deep and strong the market is for seasoned performing loans collateralized by both commercial real estate and single family homes.
Why is this?
Persistently low rate environment
Unprecedented payoff velocity of existing loans
Unprecedented liquidity at banks generated by unspent COVID stimulus and a year of excess savings
How should financial institutions take advantage of this?
Examine loans at the lower end of the rate spectrum
Evaluate credits that were questionable pre-COVID
Consider exposure to businesses that peaked prior to COVID
Like with equity rallies, sell loans into this demand vortex
Even with the absence of call protection, premium transactions for seasoned higher rate loans are common place.
Pre-financial crisis era loans which may have been underwater (due to subordinate financing, collateral value issues or both) are now “in the money”.
In a market where asset prices are at historic levels, but where fundamental economic issues exists in certain hotspots, an equity market sell off will impair value across all asset classes and cause spreads to blow out. It is an opportune moment for portfolio balancing.
Mission Capital Advisors Acquired by Marcus & Millichap
Posted Friday, November 20, 2020.
David Tobin, Principal of Mission Capital, discusses what our clients should expect from Mission Capital Advisors now that the company has been acquired by Marcus & Millichap. Hint: it’s good.
Legacy Small Balance Commercial Real Estate Loan Portfolios
David Tobin, Principal, chats about legacy small balance commercial real estate loan portfolios in this new video.
Legacy portfolios, which is to say portfolios of loans originated pre-financial crisis, are trading at extraordinary prices relative to intrinsic value. The reason for this is higher than market coupons, long payment history and solid economic fundamentals combined with intense market liquidity from bank and non-bank sources. The opportunity to exit these portfolios in as little as 45 to 60 days exists in the marketplace. And it’s a good sound judgment call to exit portfolios of loans which are above market but which have not prepaid in this highly liquid market post-financial crisis. We expect that these portfolios will exhibit elevated levels of default as well as elevated losses compared to their post-financial crisis-originated counterparts. Banks would do well to liquidate small-balance commercial real estate loan portfolios at peak market pricing today and redeploy those proceeds into other alternative lending opportunities.
William David Tobin is one of two founders of Mission Capital and a founder of EquityMultiple, an on-line loan and real estate equity syndication platform seed funded by Mission Capital. He has extensive transactional experience in loan sale advisory, real estate investment sales and commercial real estate debt and equity raising. In addition, Mr. Tobin is Chief Compliance Officer for Mission Capital.
Under Mr. Tobin’s guidance and supervision, Mission has been awarded and continues to execute prime contractor FDIC contracts for Whole Loan Internet Marketing & Support (loan sales), Structured Sales (loan sales) and Financial Advisory Valuation Services (failing bank and loss share loan portfolio valuation), Federal Reserve Bank of New York (loan sales), Freddie Mac (programmatic bulk loan sales for FHFA mandated deleveraging), multiple ongoing Federal Home Loan Bank valuation contracts and advisory assignments with the National Credit Union Administration.
BACKGROUND
From 1992 to 1994, Mr. Tobin worked as an asset manager in the Asset Resolution Department of Dime Bancorp (under OTS supervision) where he played an integral role in the liquidation of the $1.2 billion non-performing single-family loan and REO portfolio. The Dime disposition program included a multi-year asset-by-asset sellout culminating in a $300 million bulk offering to many of the major portfolio investors in the whole loan investment arena. From 1994 to 2002, Mr. Tobin was associated with a national brokerage firm, where he started and ran a loan sale advisory business, heading all business execution and development.
Mr. Tobin has a B.A. in English Literature from Syracuse University and attended the MBA program, concentrating in banking and finance, at NYU’s Stern School of Business. He has lectured on the topics of whole loan valuation and mortgage trading at New York University’s Real Estate School. Mr. Tobin is a member of the board of directors of H Bancorp (www.h-bancorp.com), a $1.5 billion multi-bank holding company that acquires and operates community banks throughout the United States. Mr. Tobin is a member of the Real Estate Advisory Board of the Whitman School of Management at Syracuse University and a board member of A&M Sports / Clean Hands for Haiti.
Memory Care & Assisted Living Facilities In Loan Portfolio Sales with David Tobin | Principal [Video]
David Tobin, Principal, chats about loan portfolios secured by memory care and assisted living facilities.
In light of the recent termination of Silverado by the Welltower REIT of 20 properties that are standalone memory care facilities, it’s incumbent upon regional, super regional and large community banks to examine their memory care and assisted living loan portfolios and understand the risk embedded in those deals.
In particular, standalone, private-pay, assisted-living and memory care facilities in over-billed markets are particularly prone to default and credit stress. One of the factors contributing to this is the fact that Baby Boom has not caught up with the demand for memory care services as the height peak Baby Boom population is moving through its early to mid-sixties, and memory care demand does not occur until late seventies and early eighties.
Banks should take this opportunity and a highly liquid marketplace to shed assets, which have a higher propensity to default or which have already defaulted. The opportunity to exit portfolios of assisted living and memory care assets is in the marketplace today, and an opportunity may not exist tomorrow.
William David Tobin is one of two founders of Mission Capital and a founder of EquityMultiple, an on-line loan and real estate equity syndication platform seed funded by Mission Capital. He has extensive transactional experience in loan sale advisory, real estate investment sales and commercial real estate debt and equity raising. In addition, Mr. Tobin is Chief Compliance Officer for Mission Capital.
Under Mr. Tobin’s guidance and supervision, Mission has been awarded and continues to execute prime contractor FDIC contracts for Whole Loan Internet Marketing & Support (loan sales), Structured Sales (loan sales) and Financial Advisory Valuation Services (failing bank and loss share loan portfolio valuation), Federal Reserve Bank of New York (loan sales), Freddie Mac (programmatic bulk loan sales for FHFA mandated deleveraging), multiple ongoing Federal Home Loan Bank valuation contracts and advisory assignments with the National Credit Union Administration.
BACKGROUND
From 1992 to 1994, Mr. Tobin worked as an asset manager in the Asset Resolution Department of Dime Bancorp (under OTS supervision) where he played an integral role in the liquidation of the $1.2 billion non-performing single-family loan and REO portfolio. The Dime disposition program included a multi-year asset-by-asset sellout culminating in a $300 million bulk offering to many of the major portfolio investors in the whole loan investment arena. From 1994 to 2002, Mr. Tobin was associated with a national brokerage firm, where he started and ran a loan sale advisory business, heading all business execution and development.
Mr. Tobin has a B.A. in English Literature from Syracuse University and attended the MBA program, concentrating in banking and finance, at NYU’s Stern School of Business. He has lectured on the topics of whole loan valuation and mortgage trading at New York University’s Real Estate School. Mr. Tobin is a member of the board of directors of H Bancorp (www.h-bancorp.com), a $1.5 billion multi-bank holding company that acquires and operates community banks throughout the United States. Mr. Tobin is a member of the Real Estate Advisory Board of the Whitman School of Management at Syracuse University and a board member of A&M Sports / Clean Hands for Haiti.
David Tobin, Principal, discusses how underlying HELOC fundamentals continue to improve alongside a strengthening US labor market and continued housing price appreciation. Secondary market HELOC pricing/yields have benefitted from the recent rally in the fixed income and credit markets.
ABOUT WILLIAM DAVID TOBIN | PRINCIPAL
https://www.missioncap.com/team/?member=dtobin
William David Tobin is one of two founders of Mission Capital and a founder of EquityMultiple, an on-line loan and real estate equity syndication platform seed funded by Mission Capital. He has extensive transactional experience in loan sale advisory, real estate investment sales and commercial real estate debt and equity raising. In addition, Mr. Tobin is Chief Compliance Officer for Mission Capital.
Under Mr. Tobin’s guidance and supervision, Mission has been awarded and continues to execute prime contractor FDIC contracts for Whole Loan Internet Marketing & Support (loan sales), Structured Sales (loan sales) and Financial Advisory Valuation Services (failing bank and loss share loan portfolio valuation), Federal Reserve Bank of New York (loan sales), Freddie Mac (programmatic bulk loan sales for FHFA mandated deleveraging), multiple ongoing Federal Home Loan Bank valuation contracts and advisory assignments with the National Credit Union Administration.
BACKGROUND
From 1992 to 1994, Mr. Tobin worked as an asset manager in the Asset Resolution Department of Dime Bancorp (under OTS supervision) where he played an integral role in the liquidation of the $1.2 billion non-performing single-family loan and REO portfolio. The Dime disposition program included a multi-year asset-by-asset sellout culminating in a $300 million bulk offering to many of the major portfolio investors in the whole loan investment arena. From 1994 to 2002, Mr. Tobin was associated with a national brokerage firm, where he started and ran a loan sale advisory business, heading all business execution and development.
Mr. Tobin has a B.A. in English Literature from Syracuse University and attended the MBA program, concentrating in banking and finance, at NYU’s Stern School of Business. He has lectured on the topics of whole loan valuation and mortgage trading at New York University’s Real Estate School. Mr. Tobin is a member of the board of directors of H Bancorp (www.h-bancorp.com), a $1.5 billion multi-bank holding company that acquires and operates community banks throughout the United States. Mr. Tobin is a member of the Real Estate Advisory Board of the Whitman School of Management at Syracuse University and a board member of A&M Sports / Clean Hands for Haiti.
This series profiles men and women in commercial real estate who have profoundly transformed our neighborhoods and reshaped our cities, businesses and lifestyles.
David Tobin, an entrepreneur and aviation lover who still gets irked by the deals he didn’t do, co-founded Mission Capital in 2002. The real estate capital markets company, which is HQ’d in New York and has offices in California, Texas and Florida, has advised financial institutions and investors on more than $75B of loan sale and financing transactions plus more than $14B of Fannie Mae and Freddie Mac transactions.
Tobin also founded EquityMultiple, worked in brokerage and did a stint with Dime Bancorp — while working in asset resolution there, he had a role in the liquidation of the $1.2B nonperforming single-family loan and REO portfolio.
Courtesy of David Tobin Mission Capital Advisors principal David Tobin and his son Lorenzo bookend Jean Jacques Peken Josue in Haiti. Lorenzo does a service project each year for Clean Hands for Haiti.
Outside of work, he is a lecturer on whole loan valuation and mortgage trading at New York University’s Real Estate School, is a member of the Real Estate Advisory Board of the Whitman School of Management at his alma mater, Syracuse University, and is a board member of the charity Clean Hands for Haiti. He keeps busy raising his two boys and, as an English major, feeling distress over grammatical errors he receives in emails.
Bisnow: How do you describe your job to people who are not in the industry?
David Tobin: In its most simple form, Mission brokers portfolios of debt, raises capital for commercial real estate projects and provides trade support for massive single-family loan portfolio transactions. Most people outside of the finance business don’t understand what we do, so I describe it in terms of my mother’s home mortgage. Every time she receives a notice from her mortgage company to send her mortgage payment somewhere else, that means that someone has sold or brokered her loan. I tell her that her home mortgage is just like a bond, which is a loan, and bonds are bought and sold.
Bisnow: If you weren’t in commercial real estate, what would you do?
Tobin: I have always been fascinated by the commercial aviation business and companies like Boeing, Airbus, Embraer, Bombardier and the like. One of my favorite authors when I was younger was Michael Crichton, and his book “Airframe” was a really interesting description of the business. It’s all in the wing design, apparently. I also find the energy business really interesting, from renewables to oil to the geopolitical issues. I have spent a lot of time reading about PDVSA, the national energy company of Venezuela, and the terrible value destruction of its franchise. Mission has brokered many debt trades of aviation-, equipment- or property-backed loans, and in a prior life, I sold hundreds of excess properties for Chevron, Exxon, Getty, Sunoco and Texaco.
Bisnow: What is the worst job you ever had?
Tobin: Aside from paper routes, my first job at 16 was working on the floor of the New York Stock Exchange as a runner during the summer of 1984. It was amazing. However the next summer, I worked for a town in Westchester as a laborer. I did a rotation, sort of like a rotation in a summer internship at Goldman … but not. We did sidewalk replacement, gardening work and garbage pickup … so for two or three weeks, I was, in fact, a garbage man. That was a tough and disgusting job. I always tell my son to be respectful to the NYC Sanitation folks because they don’t have it easy.
Courtesy of David Tobin Mission Capital Advisors principal David Tobin skiing in British Columbia
Bisnow: What was your first big deal?
Tobin: There were two first big deals. My first financing transaction was to refinance a discounted payoff of a $47M development bond secured by the Newark Airport Hilton. I met the owner in a real estate class at New York University taught by Phil Pilevsky. My first really large loan sale transaction was during the Russia Crisis in 1998 and I advised Daiwa on the sale of their entire bridge loan book of business. I think it was $250M and at the time, it seemed like a monster. In retrospect, those transactions were small but in the ’90s, $100M was a big deal.
Bisnow: What deal do you consider to be your biggest failure?
Tobin: There are several financing transactions that I have been involved in that died for one reason or another, and every time I drive by those properties, they irk me. The St. Moritz Hotel, which Ian Schrager was buying and for which I was working on the financing team, was one of them. Watching the creative process of Schrager was incredible and memorializing it in a financing package was a really interesting assignment. First Boston had provided a guaranteed take-out, and we were tasked with arranging a construction loan. We brought in a British bank who was ready to go and then First Boston’s lending platform fell apart in 1998 and so did our deal. I also went into contract on my loft building in SoHo right after 9/11 at a ridiculously low basis. I cut a deal to deed two apartments to artist-in-residence tenants living above and below me and then went out to arrange financing. It was a tiny amount in retrospect, but it simply was not available. I lost a portion of my deposit to get out of the transaction and it aggravates me to this day.
Bisnow: If you could change one thing about the commercial real estate industry, what would it be?
Tobin: I wouldn’t change a thing. It’s a perfectly imperfect illiquid business which has maintained its margins, opportunities and approachability through multiple technological booms. Each time a tech wave comes along, the nattering nabobs of negativity say they are going to make it perfectly liquid, tokenize space and buildings and trade it on a screen and it never happens.
Bisnow: What is your biggest pet peeve?
Tobin: People who write “principle balance” instead of “principal balance”, and in a broader context, as an English literature major, bad business writing and poorly written emails.
Bisnow: Who is your greatest mentor?
Tobin: My dad and then my wife. I used to go to the office with my dad on Saturdays when I was a kid. He was an attorney at Skadden and then for a reinsurance company. He taught me my work ethic. My wife was a very successful equity portfolio manager for many years and is the person whose business advice and acumen I most respect now. She is my biggest champion and motivator now (and a great mom).
Bisnow: What is the best and worst professional advice you’ve ever gotten?
Tobin: Best: Don’t focus on being right, focus on getting what you want. Second Best (I think it’s a Sam Walton quote): Some people spend 100% of their time dreaming and never get any work done. Some people spend 100% of their time working and never achieve any of their dreams. I spend 10% of my time dreaming and then 90% of my time working to achieve those dreams. Worst: Life is a marathon. I disagree … life is a series of sprints.
Courtesy of David Tobin Mission Capital co-founder David Tobin and his wife, Emily
Bisnow: What is your greatest extravagance?
Tobin: Our New York office is pretty deluxe, in a minimalist industrial sort of way. Its 35 floors above Madison Square Park with a 360-degree view. We found it, designed it and purpose built it. I find it motivating to work here. I think others do as well.
Bisnow: What is your favorite restaurant in the world?
Tobin: It’s a three-way tie. Odeon, Raoul’s and Balthazar. My wife and I took out Balthazar for an entire Saturday afternoon for our wedding reception. Angry Europeans were banging on the windows trying to get in.
Bisnow: If you could sit down with President Donald Trump, what would you say?
Tobin: I’m generally speechless on the “noise”, but as it relates to business, perhaps, “Continue to be the change agent you have been with corporate tax reform and necessary deregulation but don’t ignore those who better understand related economic issues, like trade and maintaining alliances. Good managers are good delegators.”
Bisnow: What’s the biggest risk you have ever taken?
Tobin: Starting Mission Capital … and going heli-skiing.
Bisnow: What is your favorite place to visit in your hometown?
Tobin: Edo Plaza Hibachi and Four Corners Pizza.
Bisnow: What keeps you up at night?
Tobin: Many things … finding our next opportunity, competitors, parenting, the uncertain state of the world.
Bisnow: Outside of your work, what are you most passionate about?
Tobin: My family, our time together and raising our two boys … and skiing … and occasionally sailing.
Mission Capital’s principal and co-founder, David Tobin, shares his extensive experience and insight on Why and When To Sell Performing and Non-Performing Loans.
William David Tobin is one of two founders of Mission Capital and a founder of EquityMultiple, an on-line loan and real estate equity syndication platform seed funded by Mission Capital. He has extensive transactional experience in loan sale advisory, real estate investment sales and commercial real estate debt and equity raising. In addition, Mr. Tobin is Chief Compliance Officer for Mission Capital.
Under Mr. Tobin’s guidance and supervision, Mission has been awarded and continues to execute prime contractor FDIC contracts for Whole Loan Internet Marketing & Support (loan sales), Structured Sales (loan sales) and Financial Advisory Valuation Services (failing bank and loss share loan portfolio valuation), Federal Reserve Bank of New York (loan sales), Freddie Mac (programmatic bulk loan sales for FHFA mandated deleveraging), multiple ongoing Federal Home Loan Bank valuation contracts and advisory assignments with the National Credit Union Administration.
Visit David Tobin’s team page to find contact information and more information:
Loan Sales & Real Estate Sales
Mission Capital represents preeminent financial institutions, investors and government agencies on the sale of performing, sub-performing and non-performing debt secured by all types of commercial and consumer collateral, commercial real estate investment property and tax liens.
