Top 25 Direct Commercial Real Estate Lenders for 2009

TOP 25 DIRECT LENDERS
NREI Online

The following rankings were originally published in May. The rankings are based on responses to NREI's 18th annual Top Lender Survey questionnaire, and reflect total dollars financed or arranged in commercial real estate during the 2008 calendar year. Listings are presented in two parts. The first listing includes firms financing direct loans, credit lines, CMBS lending and other forms of direct investment to the industry. The second listing ranks financial intermediaries, including mortgage brokers and financial firms that arranged or facilitated transactions during 2007.

In instances where companies utilized their own balance sheet to close loans, or a line of credit to warehouse loans prior to securitization or sale in the secondary market, that volume was not considered production on an intermediary basis. For example, conduit lending and agency lending constituted direct lending for the purposes of this survey.

While NREI made every attempt to ensure the final survey was comprehensive, some companies chose not to participate.

1. Bank of America
Financed in 2008: $129.2 billion

Charlotte, NC 28255

Website: www.bankofamerica.com/commercialre

2. Wells Fargo
Financed in 2008: $31.4 billion

San Francisco, CA 94104

Website: www.wellsfargo.com/realestate

3. Wachovia
Financed in 2008: $13.4 billion

Charlotte, NC 28202

Website: www.wachovia.com

4. Deutsche Bank Commercial Real Estate
Financed in 2008: $11.3 billion

New York, NY 10005

Website: www.db.com/cre

5. PNC
Financed in 2008: $11 billion

Pittsburgh, PA 15222-2707

Website: www.pnc.com/realestate

6. Capmark Financial Group Inc.
Financed in 2008: $7.8 billion

Horsham, PA 19044

Website: www.capmark.com

7. KeyBank Real Estate Capital
Financed in 2008: $7.7 billion

Cleveland, OH 04114

Website: www.key.com/realestatecapital

8. Prudential Mortgage Capital Co.
Financed in 2008: $7.6 billion

Newark, NJ 07102

Website: www.prumortgagecapital.com

9. Natixis Real Estate Capital Inc.
Financed in 2008: $5.1 billion

New York, NY 10019

Website: www.re.natixis.com

10. CBRE Capital Markets
Financed in 2008: $3.1 billion

Houston, TX 77056

Website: www.cbre.com/capitalmarkets

11. Goldman, Sachs & Co.
Financed in 2008: $2.5 billion

New York, N.Y. 10004

Website: www.gs.com

12. TIAA-CREF
Financed in 2008: $2.4 billion

New York, NY 11762

Website: www.tiaa-cref.org

13. Northwestern Mutual
Financed in 2008: $2.1 billion

Milwaukee, WI 53202

Website: www.northwesternmutualrealestate.com

14. Grandbridge Real Estate Capital LLC
Financed in 2008: $2 billion

Charlotte, NC 28202

Website: www.gbrecap.com

15. Principal Real Estate Investors
Financed in 2008: $1.9 billion

Des Moines, Iowa 50392-0490

Website: www.principalglobal.com

16. M&T Realty Capital Corp.
Financed in 2008: $1.4 billion

Baltimore, MD 21201

Website: www.mandtrealtycapital.com

17. GE Healthcare Financial Services
Financed in 2008: $1.24 billion

Bethesda, Maryland 20814

Website: www.gehealthcarefinance.com

18. Walker & Dunlop
Financed in 2008: $1.22 billion

Bethesda, MD 20814

Website: www.walkerdunlop.com

19. The Royal Bank of Scotland (tie)
Financed in 2008: $1.2 billion

Stamford, CT 06901

Website: www.rbs.com

19. Corus Bank, N.A. (tie)
Financed in 2008: $1.2 billion

Chicago, IL 60613

Website: www.corusbank.com

21. Zions Bank National Real Estate
Financed in 2008: $900 million

Salt Lake City, UT 84111

Website: www.zionsbank.com

22. Hudson Realty Capital LLC
Financed in 2008: $836 million

New York, NY 10003

Website: www.hudsoncap.com

23. The Community Preservation Corp.
Financed in 2008: $606 million

New York, NY 10016

Website: www.communityp.com

24. Alliant Capital LLC
Financed in 2008: $433 million

Seattle, WA 98105

Website: www.alliantcapitalllc.com

25. Wrightwood Capital
Financed in 2008: $430 million

Chicago, IL 60602

Website: www.wrightwoodcapital.com

Is Occupancy Uptick a Trend or Aberration?

December 28, 2009
National Real Estate Investor

For the first time in more than two years the occupancy rate at independent living buildings is on the rise, boosting hopes that the downturn in seniors housing has subsided and that 2010 will prove profitable for owners and operators.

The average occupancy rate at independent living properties registered 88.5% in the third quarter, up slightly from 88.4% in the second quarter, according to the National Investment Center for the Seniors Housing & Care Industry (NIC) based in Annapolis, Md. “The big question is whether this is a temporary improvement, or whether a bottom is forming,” says Michael Hargrave, vice president of research at NIC.

The outlook for assisted living buildings also is improving. The third-quarter occupancy rate rose to 88.3% from 87.7% in the second quarter. Nursing home occupancy slipped slightly to 89.1% from 89.2% quarter over quarter.

Housing market rebounds

Several hopeful signs of improvement in the broader economy could mean higher occupancies for seniors housing in 2010, experts say. Home prices nationwide rose 3.1% in the third quarter, according to the S&P/Case-Shiller Home Price index.

Prices also rose 3.1% the second quarter, bolstering the idea that the residential real estate market may be stabilizing. That means more elderly persons will able to sell their homes and move to a seniors-only facility.

Also, the Dow Jones Industrial Average has risen about 60% since last March. “There's a real wealth effect," notes Beth Burnham Mace, director of research at AEW Capital Management, a Boston-based real estate investment manager. “It really affects people's attitude. Recouping that lost wealth is important for seniors housing."

Pent-up demand could also boost occupancy. Seniors have been putting off the decision to move, waiting for the housing market to turn around. But now those seniors who really need to be in assisted living are going to have to move, some observers say. In addition, seniors who were expecting the housing market to make a quick comeback are now more realistic about the value of their homes.

Not out of the woods

Continued high unemployment could undercut demand, however, say some industry experts. Adult children often contribute toward the cost of assisted living, but a job loss affects their ability to help out financially.

“When we see employment growth, that’s when we’ll see a stronger uptick in occupancy," says David Watkins, senior vice president at Heitman, a Chicago-based real estate advisory firm.

The question remains whether landlords will have any pricing power in 2010. Heading into the downturn, seniors housing rents were growing at about 4.2% annually, according to NIC, which tracks asking rents that do not include discounts.

In 2008, rent growth slowed to 3.4% per year. And so far this year, rent growth has continued to slow, hitting 1.8% in the third quarter. About 42% of all property managers are not planning to raise rents. With the expense side growing, “operators can’t pursue this strategy for long and still enjoy profitability,” says NIC’s Hargrave.

Modest rent growth will likely occur in 2010 and 2011, says Mace of AEW. Following that two-year period, she expects rent increases to return to the norm of 4% to 6% per year as the economy gains momentum and few new buildings open as development remains constrained.

More green shoots

A refinancing wave is likely as many 10-year loans will come due in 2010 and 2011, according to Carolyn Nazdin, head of healthcare originations in the eastern U.S. For KeyBank Real Estate Capital Markets. She expects owners to refinance in advance of loan maturity dates in order to lock in today's low rates. “Borrowers are willing to pay pre-payment penalties in order to reschedule their loans now,” she says.

Next year will be fairly healthy for the industry, predicts Arnie Whitman, CEO at Formation Capital, an investment firm with $3 billion in assets. Formation's development arm recently opened a new property near Houston, the Solana at Cinco Ranch. The rental building includes 126 independent living and 32 assisted living units. Rents average about $3,600 a month.

The company has five other projects planned. “We are contrarians,” explains Whitman. Formation decided to build while other firms abandoned plans for new projects. “If you shut down development, the lag time to get started again is huge,” he notes.

But the cost of capital in 2011 and 2012 worries Whitman. While debt financing will become more widely available, he thinks interest rates could rise significantly. At the same time, he doesn’t expect owners and operators to have much pricing power because consumers have undergone an attitude shift and will remain wary of spending.

“If inflation gets momentum, we could be in trouble,” warns Whitman. “Businesses can only support a certain cost of operations before it affects the ability to be profitable.”

Agency Lending Gives Borrowers a Much-Needed Boost

December 26, 2009
National Real Estate Investor

Fannie Mae and Freddie Mac continue to be the dominant providers of debt financing in the seniors housing industry, as evidenced by several deals that have closed in the waning days of 2009.

Ventas Inc. (NYSE: VTR), a large healthcare real estate investment trust, was able to refinance a 220-unit seniors housing community in Framingham, Mass., thanks to a $40.5 million commercial mortgage provided by Fannie Mae. KeyBank Real Estate Capital arranged the financing.

“This was a challenging transaction with lots of moving parts, undertaken at an uncertain time in the financial sector, says Richard Schweinhart, executive vice president and CFO of Chicago-based Ventas.

The share price of the giant REIT closed at $43.18 on Tuesday, Dec. 22, up from $28.95 a year ago. The company’s portfolio of properties includes seniors housing communities, skilled nursing facilities, hospitals and medical office buildings.

According to the American Seniors Housing Association, Ventas ranked as the sixth largest owner of seniors housing in the U.S. with 243 properties and 23,204 units in its portfolio as of July 1, 2009.

Freddie Mac also has been busy on the seniors housing financing front. The government-sponsored agency recently provided $12.3 million in financing for Seattle-based Emeritus Senior Living (NYSE: ESC).

Arranged by KeyBank, the funding will be used by Emeritus to refinance three seniors housing facilities, two in Texas and one in Oregon. 
 
Approximately $6.4 million will be used to refinance Emeritus at Saddleridge Lodge, an 80-unit seniors housing property built in 1997 in Midland, Texas.

Another $3.7 million will be used to refinance Meadowbrook Assisted Living Community, a 55-unit seniors housing property built in 1986 in Ontario, Ore.

The final $2.1 million of the loan will be used to refinance Emeritus at Seville Estates, a 45-unit assisted living and memory care senior housing facility built in 1996 in Amarillo, Texas.
 
During the last two years, KeyBank has closed more than 30 agency-backed commercial mortgage transactions for Emeritus.

Emeritus has used the financing, totaling more than $229 million, to acquire new properties and to refinance debt on seniors housing properties across the country.

The stock price for Emeritus Corp. closed at $17.57 on Dec. 22, up from $9.90 a year ago.

Fortune - 100 Best Companies to work for in 2009

1 NetApp
2 Edward Jones
3 Boston Consulting Group 10% 1,680
4 Google
5 Wegmans Food Markets
6 Cisco Systems
7 Genentech
8 Methodist Hospital System
9 Goldman Sachs
10 Nugget Market
11 Adobe Systems
12 Recreational Equipment (REI)
13 Devon Energy
14 Robert W. Baird
15 W. L. Gore & Associates
16 Qualcomm
17 Principal Financial Group
18 Shared Technologies
19 OhioHealth
20 SAS
21 Arnold & Porter
22 Whole Foods Market
23 Zappos.com
24 Starbucks
25 Johnson Financial Group
26 Aflac
27 QuikTrip
28 PCL Construction Enterprises
29 Quicken Loans
30 Bingham McCutchen
31 CarMax
32 Container Store
33 JM Family Enterprises
34 Umpqua Bank
35 Kimley-Horn & Associates
36 Alston & Bird
37 TDIndustries
38 Microsoft
39 Paychex
40 EOG Resources
41 Camden Property Trust
42 Plante & Moran
43 Rackspace Hosting
44 NuStar Energy
45 King's Daughters Medical Cntr.
46 American Fidelity Assurance
47 DreamWorks Animation SKG
48 Mattel N.A.
49 Intuit
50 Burns & McDonnell
51 Ernst & Young
52 Booz Allen Hamilton
53 Stew Leonard's
54 Erickson Retirement Communities
55 Salesforce.com
56 KPMG
57 Novo Nordisk
58 PricewaterhouseCoopers
59 Scripps Health
60 Scottrade
61 Deloitte
62 Griffin Hospital
63 Mayo Clinic
64 Milliken
65 Texas Instruments
66 MITRE
67 Children's Healthcare of Atlanta
68 Southern Ohio Medical Center
69 National Instruments
70 Stanley
71 Men's Wearhouse
72 Nordstrom
73 Chesapeake Energy
74 Alcon Laboratories
75 Atlantic Health
76 Lehigh Valley Hospital & Health Network
77 Northwest Community Hospital
78 Marriott International
79 Baptist Health South Florida
80 Bright Horizons
81 S.C. Johnson & Son
82 Perkins Coie
83 eBay
84 Juniper Networks
85 Arkansas Children's Hospital
86 CH2M HILL
87 Orrick Herrington & Sutcliffe
88 Publix Super Markets
89 Herman Miller
90 FedEx
91 Gilbane
92 Four Seasons Hotels
93 Valero Energy
94 Build-A-Bear Workshop
95 Kimpton Hotels & Restaurants
96 T-Mobile
97 Accenture
98 Vanderbilt University
99 General Mills
100 SRA International

Let us praise the venture capitalists

Posted by Adam Lashinsky, Senior Editor at Large
December 22, 2009 6:00 AM
Fortune Magazine

I had a small, Twitter-hosted dustup recently with Trevor Loy, a pleasant fellow who, when he is not Twittering, brings truth and justice to the world via the agency of venture capital. Loy was hot and bothered over some turn of events in Congress having to do with immigration policy. Many entrepreneurs are immigrants, you see. And because venture capital equals entrepreneurialism, the proposed congressional action might harm VCs, which, in turn, would grievously harm the U.S. economy. This, Loy, explained, is because fully 21% of the U.S. economy is attributed to revenue earned by "venture-backed" companies.

Where, I wondered, did this startlingly encouraging statistic come from? Loy was kind enough to supply me the link to a report paid for by the National Venture Capital Association. Thank goodness for the hard work the NVCA does to help us understand the good VCs spread throughout the land. NVCA President Mark Heesen, a savvy Washington hand I've been privileged to chat with over the years, prefaced the report with a few nice words about the industry that employs him. "The data," he wrote, "continues to confirm that venture capital matters deeply, not only to our economy but to everyday lives of Americans, who use venture-backed innovations, work at venture-backed companies and dare to bring new ideas to the market."

Do you feel as warm and tingly as I do after reading that?


But about that 21% figure. The data the NVCA bought basically is arguing that "venture-backed" companies power about a fifth of the economy. What's a venture-backed company? Examples include Intel (INTC), Microsoft (MSFT) and FedEx (FDX). Never mind that these companies haven't received a dime of venture money in decades. They have big revenues, and only a simpleton wouldn't be able to see that if some kindly venture capitalist hadn't been around to fund, guide, and help promote feeble souls like Bob Noyce, Bill Gates, and Fred Smith, why, the U.S. might not be the powerhouse that it is today.

There's a purpose to all of this, of course. Washington, from time to time, tries moving the goal post on venture capitalists, asking them, for instance, to pay taxes on their income the same way schoolteachers and nurses do. VCs prefer to pay taxes at the lower rates afforded to investors who risk their savings on their investments. These kinds of investors include the pension funds managing the retirement accounts for schoolteachers and nurses. But I digress. Should the VCs be forced into a higher tax bracket, the economy most assuredly would suffer. From deep in the report:

Tax differentials, such as favorable rates for capital gains and carried interest, serve as important tools for encouraging investment in emerging growth companies. In our current financial system, venture capital is the only source of long-term, institutional funding for such companies. When government increases the tax burden on venture capital, however, it inhibits the flow of dollars to innovative young start-ups.

In other words, should Congress ever change the tax treatment of VC income, or any other policy that governs how VCs get their important work done, it's not a bunch of second-career MBAs in gorgeous offices who'll be affected. No, it's "innovative young start-ups" that'll bear the brunt.

Now, more than ever, what this country really needs is a vibrant venture industry that can get about its business of company creation and stellar returns for its investors without a bunch of barriers thrown in its way by Washington.