The 99% of CRE Finance

By Erika Morphy

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Joe Dykstra, executive vice president of Los Angeles-based Westwood Financial Corp., has about $60 million worth of financing before conduits at the moment. For the most part, these properties are not, as he puts it, “life insurance quality.” Yet he is fairly certain he will get most, if not all, of the funding.

Over the next five years, the company will have about $600 million in secured debt coming due that will require refinancing. Whether the CMBS market will absorb that, however, Dykstra doesn’t have a clue.

Since the crash, the CMBS market has proven itself willing to turn off the spigot with little notice. That happened in Q3 of 2011 as Europe’s sovereign debt problems became apparent and Standard & Poor’s downgraded the US debt rating.

Then, conduits became active again in the middle of December. “Toward the end of the year, you could pick up the phone and get aggressive quotes from a number of players.” Dykstra says. “Today, there seems to be more debt available than there was in the last five months of the year. But I have no doubt that as soon as there is any risk exposure to the paper, they will exit.

“We are shopping around now because the CMBS shops are open—they might not be in six months,” he adds…

…For the rest of the story, visit the January 2012 issue of Real Estate Forum.

Categories: Capital Markets, National