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Our New York City office provides a complete range of options for all types of commercial real estate financing. We can arrange commercial mortgages for any type of commercial property through our unmatched network of lending partners. Call our local office to learn more.

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Ernie DesRochers celebrates 30 years with the company

Ernie DesRochers in our New York office celebrates 30 years with the company this month. He’s an avid Yankees fan, world traveler and wine aficionado who, like a fine cabernet, has only gotten better with age! Thanks for being part of the team, Ernie!

Congratulations to Ernie DesRochers on celebrating 30 years with the company

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Ernie DesRochers featured in REBusiness Online: Tax reform could be a ‘boon’ to the CRE industry

While the full implications of the new tax reforms have yet to be felt, many in the commercial real estate sector believe these reforms will reflect favorably on this industry. The reduced corporate tax rate has already inspired many companies, including Apple, Boeing, and banks like JPMorgan Chase, U.S. Bancorp, Wells Fargo, Bank of New York Mellon Corp. and Fifth Third Bank to up their investment in employees through bonuses, higher minimum wages, increased 401(k) matching and advanced education programs.

A stronger workforce and healthy bank sector help the economy as a whole, but Ernest DesRochers, senior vice president and managing director in NorthMarq’s New York office, believes there is much more to be excited about.

“More than any sector, the commercial real estate sector has not seen potential benefits like these since the early 1980s,” he says. “Shortened depreciation for all property types, from 39 years for commercial, 27.7 years for multifamily and 25 years for all types, is a boon to itself. Add the retention of 1031 tax deferred sale rules, full deduction of mortgage interest, the preservation of carried interest and the taxing of pass-through entities like LLCs at a lower tax rate, and we could see major new development in many property sectors.”

Of course, there is always the possibility that there could be too much of a good thing. Confidence – not to mention developers – can overbuild. Lenders can loosen their purse strings just a bit too far. Investors can rob Peter to pay Paul. While 2008 might be 10 years ago, responsible lenders would like to believe those within the industry still remember it like it was yesterday.

“Massive tax breaks for the commercial real estate industry often cause a boom to bust in the market as lenders chase product to lend on and developers take on more risk to generate yields,” DesRochers cautions. “Will lenders maintain the discipline they have developed since the bust of 2009? Will cap rates move up or down to reflect the new tax benefits?”

These concerns and further questions surrounding the new tax reforms aren’t unique to DesRochers, as Kristen Croxton, senior vice president of Capital One Multifamily Finance in Capital One’s Newport Beach, California office, can tell you.

“Tax reform was a hot topic at the recent National Multifamily Housing Council conference and I think it will continue to be a hot topic until all the pieces are ironed out,” she says. “I’m most interested in better understanding which clients and types of organizations will benefit the most from the tax changes. In addition, it will be important to better understand how these changes could impact client investing decisions in 2018. Will they buy more? Refinance more? These are questions that I’m hoping CREF will shine a light on.”

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Local Office Overview

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Download this two-page flyer to learn more about the New York City office.

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Commercial Real Estate Lending in 2017: Optimism and Uncertainty

CREJ_thumbErnest DesRochers, senior vice president/managing director of NorthMarq Capital’s New York metro office, recently authored an article for the Connecticut Real Estate Journal.  The article, titled “Commercial Real Estate Lending in 2017: Optimism and Uncertainty,” covers a range of topics highlighted at the recent MBA Multifamily conference in San Diego. Optimism is still abundant, but thanks to market uncertainty, many are unsure how long this will last. See the full story here.

 

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Commercial Real Estate Lending in 2017: Optimism and Uncertainty

According to Franklin Roosevelt, “Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.”

The Mortgage Bankers Association recently held its annual Commercial Real Estate Finance and Multi-Family Conference in San Diego, California. Over 3,000 people attended the four day conference whose focus is networking, relationship building and deal making.

The market sentiment for commercial real estate investing is still optimistic. Conference participants were uncertain, however, if this optimism can continue. There were several takeaways from the conference which support this premise:

  • Lenders are preparing for all possible scenarios given the current economic and political climate. Strong job growth and a stable economy has led to more than just talk that rates will be increased by the Federal Reserve this year. These facts are reflected in their new loan underwriting models.
  • Life Insurance company lenders, long the bellwether for commercial real estate lending trends, all desire lower lower-leveraged, higher-quality, best-of-class mortgage loans, eschewing risk for safety. For example, 70 percent LTV lenders last year want 65 percent LTV deals today. 65 percent lenders last year want 60 percent today with all lenders using widening cap rates.
  • CMBS lenders have gotten back into the market at lower spreads after a year that was characterized by high spreads and uncertainty about risk retention. Most have figured out risk retention with some firms owning their own “B” pieces. Like life company lenders, CMBS lenders are very concerned about credit quality and leverage. 75 percent last year is 70 percent (and less) today. Lower stressed LTV ratios and increased Debt Yield requirements are commonplace.
  • The market for commercial property sales has slowed down. More and more market participants believe prices have peaked nationally and in the Tri-State region. Property owners will no longer have cap rate compression to bail them out. The new cap rate trend is upward.
  • Other capital sources who provide fuel to the lending market are the GSEs consisting of Freddie Mac, Fannie Mae, and FHA. They are the most active multifamily lenders in the country, but they too have a continued measured approach to lending.
  • Regional banks and credit unions have tightened underwriting on account of new regulation and economic concerns. They will take more risk generally because of their recourse requirements.
  • Money for bridge lending from private equity firms is more available now than at any time in the recent past. Generally non-recourse these loans at 75 percent of value and pricing is generally 450 bps over Libor or higher depending on risk.
  • Unlike past cycles, borrowers have not been pushing the envelope on trying to finance real estate projects. In many respects borrowers are just as disciplined.

Underwriting parameters continue to be conservative. Insurance companies are generally quoting spreads of 160-200 over US Treasuries for sub 65 percent loans. Lower spreads for lower LTV loan are available. The minimum debt coverage ratio is generally 1.50x assuming a 25 year amortization schedule. Available loan terms are generally 7-10 years with longer fully amortizing loans (up to 30 years) available on a select basis.

In contrast, pricing for conduit loans are generally 200-245 over swaps with loan to value ratios of 70 percent or less. Spreads can be tighter for lower sub 60 percent LTV deals. These loans generally require full leasing reserves. Generally these loans are 10 years in length with 30 year amortization. Some interest only may be available if the property, and leverage, warrants.

Multifamily lenders continue to have strong deal flow but they too have gotten more conservative. Pricing is generally 175-225 over US Treasuries depending on leverage and DSC ratios are a minimum of 1.35x. Loan terms are generally 5-10 years.

In common with all of these lenders is the desire to maintain discipline with respect loan underwriting metrics. As capital continues to chase the best deals, lenders are holding to debt yield, LTV and debt service constraints, and are insisting on getting paid for risk.

With the second quarter about to commence, investors with financing needs will have to meet market challenges head-on in order to achieve desired financing levels.

This article was originally published in the Connecticut Real Estate Journal March 17, 2017.

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Ernest DesRochers featured in New England Real Estate Journal

Ernest DesRochers authored a featured commentary in the March 18 edition of The New England Real Estate Journal titled “Commercial real estate lending in 2016: Risk on, Risk off!” Read the full article here.

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NorthMarq Capital welcomes new senior vice president and managing director to its New York City office

NEW YORK CITY (December 17, 2015) – Robert Delitsky has joined the New York City office of NorthMarq Capital as senior vice president and managing director. At NorthMarq, Delitsky will be responsible for arranging various types of financing through NorthMarq’s life insurance company correspondents, banks, CMBS lenders, Fannie Mae and Freddie Mac. He will also arrange equity, preferred equity and mezzanine debt for his clients.

“We are excited that Robert is joining our team here in New York,” said Ernest DesRochers, managing director of NorthMarq Capital’s New York City office. “He brings experience as a successful mortgage banker and has a deep knowledge of the New York metro market, having transacted here for many years.”

Prior to joining NorthMarq Capital, Delitsky spent 19-years as managing director at HFF’s Manhattan office. Before that he was associated with a shopping center developer on Long Island. He has been involved in the real estate business since 1979 when he began his career at Bankers Trust Company and later held a position at Bank Leumi Trust Company of New York.

Delitsky is a licensed Real Estate Broker in New York and is active in The Real Estate Board of New York, ICSC, ULI and is a former Membership Chairperson for the New York Chapter of NAIOP.

About NorthMarq Capital
NorthMarq Capital, the largest privately held commercial real estate financial intermediary in the U.S., provides debt, equity and commercial loan servicing through its 36 offices across the U.S. The company has built long-term relationships with life companies, CMBS platforms and local, regional and national banks and has a long track record of multi-family loan origination through Freddie Mac Program Plus™, the Fannie Mae DUS program and through FHA, resulting in more than $13 billion in annual production volume and a loan portfolio of more than $45 billion. For more information please visit northmarqcap.wpengine.com.

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Keith Braddish Joins NorthMarq Capital as Senior Vice President/Managing Director of New York City Office

MINNEAPOLIS (Jan. 21, 2014) – Keith Braddish has joined NorthMarq Capital as senior vice president/managing director of its New York City office.

In his new role, Braddish will focus on originating senior/mezzanine debt, joint venture and preferred equity for commercial real estate transactions. His clients will benefit from his 25-year expertise in the capital markets arena, including lending platforms such as FHA, Fannie Mae, Freddie Mac, CMBS, regional and local banks and life insurance companies. Braddish has worked on permanent and bridge financing for both acquisitions and refinancings.

Prior to joining NorthMarq, Braddish served as an executive vice president in the CBRE Capital Markets/Institutional Group’s New York City office, a senior mortgage banker with Holliday Fenoglio & Fowler and as a real estate appraiser for Koeppel Tener Real Estate Services and Cushman & Wakefield. With 25 years of real estate experience, he has placed in excess of $15 billion in mortgage financings, including mezzanine and equity.

Braddish regularly appears on real estate panels and as a guest lecturer at New York University’s Real Estate Institute. He has written numerous bylines for industry publications. He was most recently the president of the Real Estate Board of New York’s Finance division.

“We are very pleased that Keith has joined the NorthMarq Capital team in New York City,” said Ernest DesRochers, senior vice president/managing director at NorthMarq’s New York City office. “He helps us greatly in expanding our client reach, bringing a long and successful track record to our stable of correspondent lenders. We look forward to working with Keith in the years to come.”

About NorthMarq
NorthMarq, the largest privately held commercial real estate financial intermediary in the U.S., provides mortgage banking and commercial loan servicing in 34 offices coast to coast. With more than $10 billion in annual production volume and servicing a loan portfolio of more than $42 billion, the company offers expertise to borrowers of all size. The company has a long track record of multi-family financing as a Freddie Mac Program Plus™ Seller-Servicer, and through its affiliation with Fannie Mae DUS lender AmeriSphere Multifamily Finance. In addition, NorthMarq has long loan production and loan servicing relationships with over 50 life companies, many CMBS platforms and hundreds of local, regional and national banks. For more information, please visit northmarqcap.wpengine.com.

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