Posts Tagged ‘buildings’

Investment Banking in an Economic Meltdown

Thursday, June 25th, 2009

Investment banks are hunkering down locked_up_moneyto preserve capital, primarily because there are grave concerns about current property valuations, says Charles Krawitz, Senior Loan Sales Asset Manager, Fifth Third Bank, in an interview for The Alter Group podcasts on real estate.  Banks are reluctant to lend $10 million to a property that might be worth only $8 million, and with good reason.  Multifamily housing currently is the least distressed asset class, thanks to Fannie Mae, Freddie Mac and FHA financing that is creating a market for loans on these properties.

Distressed assets fall into three tranches – buildings, loans and securities.  According to Charles, if a property is struggling and the cash flow is impaired, there is a commercial lending problem.  In a CMBS structure, the loan has been sliced and diced so many times that it’s likely to be toxic and beyond restructuring.  Fully 1.8 percent of commercial loans cannot be restructured, and $400 billion in loans are rolling over this year alone.  The challenge is to pin down values in a distressed market when there are no comparable sales statistics.

One smart thing that the government has done is expand loans to small businesses through the Small Business Association (SBA).  With interest rates so low, this is very beneficial to small businesses, Charles notes.  Capital is once again flowing – though not in a tsunami – but that’s very good news.  The government will be an equity partner, and it’s likely that certain approved vendors will be part of this program.  A lot of questions remain, but it’s a very strong effort on the government’s part.

To listen to Charles Krawitz’s entire interview on the state of investment banking, click here for the podcast.

Make Green Buildings Grow

Monday, June 16th, 2008

Buildings four stories and higher use 65 percent of electricity generated in the United States, according to a recent article on the website http://www.tmcnet.com/.

Several states – notably California – are requiring all new government buildings to qualify for green certification.  Additionally, California is looking at the possibility of granting preferences to private building owners that are environmentally friendly when renewing leases with government agencies.

“All the people in the L.A. region want to come to my place to work,” said Peter Cho, chief engineer of the futuristic California Department of Transportation regional headquarters in downtown Los Angeles.  The 13-story green building, which occupies an entire city block, is attracting people with its sleek horizontal architecture, abundant natural lighting and healthier indoor air.

The building incorporates one monolithic solar-panel wall, which makes it 35 percent more energy-efficient than California state building codes require.  Another environmentally friendly element is the elevators that are programmed to skip two floors at a time to encourage building occupants to use the stairs.

Not unexpectedly, getting companies to build green is not easy.  According to the United States Green Building Council’s Lance Williams, “There is resistance to anything new, especially if it requires people to invest in something new or to believe in something new.  But there are people being converted…every single day.”

For their part, commercial building owners believe it is more effective to have direct financial incentives for going green.  Government’s green-building programs help in this way, and the Building Owners and Managers Association International is lobbying Congress to extend tax incentives to retrofit buildings to conserve energy.

(http://www.tmcnet.com/usubmit/2008/04/20/3397486.htm)