Commercial Loans and Fun Blog

Last week I wrote a well-received article about commercial real estate CLO's.  Thank you for all of your positive and kind comments.  

You will recall that CLO stands for collateralized loan obligations, which are bonds backed by a collection of loans.  You can tell from the title of this article that some of these CLO's are in trouble; but it is important to note that the troubled CLO's are NOT the ones backed by bridge loans on commercial real estate.  The troubled CLO's are the ones backed by junk bonds.  More on this later.

I was writing a training article this week about trust deed investing.  I pointed out to our prospective trust deed investors that real estate values tend to crash about once every ten to twelve years.  The lesson for the day was that trust deed investors should be very aware of where they are in the real estate cycle.

Trust deed investors can be very aggressive right after a financial crisis, after real estate values have already plunged by 45% and finally found a bottom.  Examples of financial crises include the S&L Crisis, the Dot-Com Meltdown, and the Great Recession.

But when it has been ten to twelve years since the last financial crisis, the wise trust deed investor should dial back his aggressiveness on his loan-to-value ratios.  He should be content with lower yields in order to compete for safer deals.  

Curious, I started doing the math.  Let' see, the Great Recession was in 2008.  Today is 2020.  Twenty-twenty minus 2008 works out to ... holy crap... twelve years!

Then I read yesterday the most important article about the economy that I've read in five years.  It was an article in the Atlantic Magazine entitled, Will the Banks Collapse?  I strongly urge you to read the full article.

The gist of the article is this:  America's largest banks are in serious danger.  They have a poop-ton of money invested in CLO's - even more than they had invested in subprime mortgages in 2007.  These investments could easily evaporate, and the losses would wipe out 50% to 80% of their capital - the dough they've retained to act as a protective buffer against loan losses and which protects depositors.

Think back to Lehman Brothers.  The crash in subprime mortgages wiped out their capital.  Poof.  Bye-bye, Lehman Brothers.  See the picture at the top of the article.

What's so wrong with CLO's?  First of all, in order to distinguish between commercial real estate CLO's (which are fine) and the troubled CLO's backed by junk bonds, I am going to call the latter, junk bond CLO's.

Normally big corporations, when they need money, can either borrow from a bank or issue bonds in the corporate bond market.  Corporate bonds with a maturity date of less than 270 days are known as commercial paper.  The commercial paper market has little appetite for bonds rated BB or lower, which we know as junk bonds.  

These high-yield junk bonds are instead bought up by companies in the CLO business known as asset managers.  There asset managers bundle them into portfolios, create different tranches (slices of the portfolio which take different levels of risk), get the various tranches rated by a rating agency (Moody's, Standard & Poor's, etc.), and then sell off these rated bonds to institutional investors.  The high-yield bond market is also known as the leveraged loan market.

The riskiest tranches offer sky-high yields, but they will be the first to absorb any losses in the portfolio.  The lowest-yielding tranche, however, will often be rated AAA. Think about that.  You have a collection of junk bonds, issued by companies which are sometimes close to bankruptcy, and yet somehow some AAA-rated bonds magically emerge.

About now, some of you may be asking yourselves, "Hey, wait a minute.  I think I've heard this song before."  Yup.  These are the same shenanigans that took place in the years leading up to the Great Recession with subprime mortgages.  As Dr. Phil might ask, "How did that work out for you?"

The author then goes on to point out that the theory behind junk bond CLO's is that the default correlation is low.  The default correlation is a measure of the likelihood of loans defaulting at the same time.

"The main reason CLOs have been so safe (in recent years) is the same reason (why) CDOs seemed safe before 2008.  Back then, the underlying loans were risky too, and everyone knew that some of them would default.  But it seemed unlikely that many of them would default at the same time.  The (subprime residential) loans were spread across the entire country and among many lenders.  Real-estate markets were thought to be local, not national, and the factors that typically lead people to default on their home loans—job loss, divorce, poor health—don’t all move in the same direction at the same time.  Then housing prices fell 30 percent across the board and defaults skyrocketed."

Right now the U.S. economy is reeling from the coronavirus and the lockdown.  Name brand companies are filing for bankruptcy or closing stores in big bunches.  The default correlation today is far from low.  The Coronavirus Crisis has depressed the economy so badly that we are having a tidal wave of corporate defaults.  The losses in junk bond CLO's are likely to wreck havoc, even in the the AAA tranches of large CLO's.

During the Great Recession, Congress and the U.S. Treasury bailed out the big banks.  The author points out in his article that when the big banks report their losses in CLO's, Congress and the American people may be far less forgiving than in 2008.  Instead of just Lehman Brothers, Congress and the Treasury may let a whole bunch of big banks fail.  The author suggests that the result may be lots of smaller banks focussed primarily on traditional business, like taking deposits locally and lending to local companies known to the bank. 

Now let's add a few more incendiary goodies to our explosive mix.  We still have not seen the wave of articles in the financial press talking about declining worldwide sales of raw materials and goods to China, the world's number two market.  China was hurt pretty badly by the Coronavirus Crisis and the resulting worldwide condemnation.  I can't imagine too many companies moving their manufacturing plants to China now.  Then we have China's contracting money supply, when banks continue to rake in loan payments but fail to recycle the money into new loans.  So far China has successfully covered up their declining GDP, but sooner or later investors will realize that China is reeling.

Then we have the Presidential election.  It is looking more and more likely that Donald Trump could lose.  The left controls most of the press, so Mr. Trump could make a tough but probably wise decision (like encouraging governors to re-open their states before the U.S. economy completely cratered), but the liberal press would simply characterize the act as both the act of a dictator and as a failure of leadership at the very same time.  Haha!

With the coronavirus still active, Trump can't bypass the press by holding huge rallies, like he did in 2016.  Perhaps the final nail in Trump's coffin was when Twitter and Facebook began censoring and censuring his posts and political ads.  When it becomes clear that Trump might lose, the markets are not going to like it.

The only good news is that the Fed is flooding the markets with trillions and trillions of dollars.  The Fed is even buying up a bunch of junk bond CLO's.  It has often been said, "Never fight the Fed."  But what happens after the election, when the spigot of money is tightened?

My recommendation is to watch the price of gold.  Gold goes up, not so much during periods of inflation, but rather when investors lose confidence in the ability of corporations to make the payments on their bonds.  Unlike bonds, gold cannot default.  It will never go to zero (because women look so gorgeous wearing it).  I urge you to look at gold prices as the canary in the coal mine for the coming financial crisis.

A CRE CLO stands for a commercial real estate Collateralized Loan Obligation, and it is a security that is backed by a pool of commercial loans.  The individual borrowers make their payments to the issuer – the company that made and pooled the loans – and then the issuer makes payments to the investors who invested in the bonds backed by the CLO.

A typical commercial al real estate CLO (“CLE CLO”) lasts somewhere between two to four years.  In order to create a CLO, the issuer – also known as the collateral manager - begins by securing a warehouse line to acquire the commercial loans.  Once this warehouse line has been secured and the new commercial loans have been made, the collateral manager begins issuing the CLO securities to investors.  The proceeds from the issuance of these securities (CLO bonds) are then used to pay off the warehouse line, and the excess proceeds are used to purchase additional loan assets.

This brings up an interesting point.  Whenever an issuer (think of the issuer here as the lender) securitizes the loans, the issuer sells the bonds for more money than the amount of the loans.  The issuer earns a premium.  The issuer might make $300 million in loans and sell them off for $320,000.  This extra $20 million (premium) is the issuer’s whole incentive for securitizing the deal.

CLOs are separated into several tranches, which are separate slices of the pool of loans. They are differentiated by risk based on the priority of its claim on the payouts and the exposure to risk of loss from the loan pool.  The investors who invest in the lowest yielding tranche get paid first.  If there is any money left over, the second lowest yielding tranche gets paid, and so on.  Given the varying levels of risk, each tranche is typically assigned a different credit risk rating.

CLOs can be actively managed or static.  Managed CLOs allow the collateral manager to buy and sell individual loans for the collateral pool of the CLO to increase the gains of the security.  Static CLOs, on the other hand, invest in a pool of loans without any reinvestments once those loans mature, and typically feature a shorter term than actively managed CLOs.

CRE CLOs are primarily made up of bridge loans on properties that are in a transitional phase, such as a renovation, expansion or repositioning.   This differs from other common financing options like real estate mortgage investment conduits (REMIC), which pool mortgages together in order to issue mortgage-backed securities.   REMICs are significantly more restrictive, in that renovations or any changes to the properties affecting value may not be permitted.   

Additionally, since CRE CLOs can be static or managed, collateral managers can change the collateral of the CLO throughout its reinvestment period.  REMICs, on the other hand, do not allow changes to the pool of loans throughout its entire lifetime.  This is due to the federally tax-exempt nature of REMICs, which can be lost if significant changes are made to the collateral.  CRE CLOs have proven to be a flexible option for borrowers, lenders and investors alike.

Did you know that if you have as conduit first mortgage that you are not allowed to improve the value of the collateral?  Suppose you own a shopping center, with a 20-acre vacant parcel behind it.  If you add 120 self-storage units onto that vacant land, thereby increasing the income generated by the property by $10,000 every month, that the conduit lender will likely foreclose on you!  It’s an IRS requirement.

In recent years, the issuance of commercial real estate (CRE) collateralized loan obligations (CLOs) has slowly increased.  After a record year in 2018, issuance was over 30% higher in 2019, signaling that the growth continues to accelerate.  The CLOs that have emerged after the financial crisis of 2008 have significantly different collateral, primarily comprised of transitional, first lien secured mortgages rather than the mezzanine and discounted debt that was seen prior to the crisis.

Prior to the financial crisis, CRE CLOs, previously known as collateralized debt obligations (CDOs), were structurally much different. Issuers typically did not have much risk at play in terms of equity in the security, and they were primarily used as a way to take advantage of arbitrage opportunities.  Many times, CDOs would be packaged with discounted subordinate bonds from commercial mortgage-backed securities (CMBS), thus taking highly leveraged, non-investment grade securities and repackaging them into highly rated CDOs.  There was very little exposure to transitional, first lien collateral.  These issues, among others, caused a high level of fear of these products within the market.  (This is a polite way of ways they were darned risky speculations.)

Following the financial crisis of 2008, many changes have been made to CRE CLOs.  As previously mentioned, the CLOs that have recently emerged have different collateral.  They are now primarily comprised of transitional, first lien secured mortgages instead of mezzanine and discounted debt.  

Many times, issuers of CRE CLOs are the lenders who raise money by issuing the CLO bonds and offering equity to outside investors for the issuance of loans to borrowers seeking transitional loans.  Recent issuers typically hold a notable amount of equity in the CLO, opening themselves to losses.  In plain English, modern issuers of CRE CLO’s have a ton of skin in the game.

Before the crisis, many issuers had little to no loss exposure, creating situations of moral hazard in the pursuit of arbitrage.  Additionally, the terms of CLOs prior to the crisis were typically around ten years, while current terms are around three years on average.

CLOs offer several improvements to other CMBSs, including interest coverage tests and over-collateralization tests, so that the successive structure of the payments waterfall can be adjusted to divert the payments away from subordinate tranches and into senior tranches to avoid losses.

In late 2019, before COVID, highly-rated tranches of CRE CLOs with a two-year maturity were earning approximately 110 basis points over benchmark rates, while CMBS’s were earning just 50 basis points over benchmark rates.  The shorter duration and the floating rate nature of CRE CLOs is attractive to investors in a rising rate environment relative to CMBSs, that were previously enjoying higher demand.   Additionally, CRE CLO collateral managers are often involved in the loan origination and servicing processes for the loans making up the collateral, which can have a strong impact on loan performance and potential workouts.  In plain English, the same guys who brought the elephants to the parade have to clean up after them.  

Pre-COVID Outlook For CRE CLOs

Before the coronavirus crisis, the demand for CRE CLOs was increasing.  This rising liquidity was allowing lenders to borrow at cheaper rates, which in turn lowered the rate at which borrowers could obtain loans.  Bloomberg indicated that there were 20 active issuers of CLOs as of July 2019.  In 2019, CLO issuance reached $19.2 billion, a 40% year-over-year growth since 2016.  As new issuers entered the market, borrowing options were growing as more issuers competed on offerings.   

Post-COVID Update:

Collateralized Loan Obligations in the commercial real estate market are a major underpinning of the bridge loan sector.  It has been virtually shut down since early March as no bond buyers were active.  

Activity has started up again in the past few weeks, as some pools of selected pre-COVID originated loans are being successfully securitized.  Spreads are wider, for example: pre-COVID pricing for AAAs was approximately LIBOR + 100.  Those bonds are now selling at about L + 235 with oversubscribed buyer interest.

Look for bridge loan programs offering 80% LTC loans at L + 275-300 pre-COVID to now offer 60-70% LTC at L + 450 – 550.  And the now familiar stratification of product types will be in effect: multifamily and industrial in favor, with office needing a good story, retail very selective and no hotels.

Guys, I would love to be able to say that I was smart enough to write this article; but in truth, I stole much of this great material from a wonderful article on the subject by an obviously competent law firm.  I have tried to translate some of the more complex language into baby language, which is the only language I understand.

The Post-COVD Update was stolen from my wonderful friends at George Smith Partners, who issue a wonderful, free newsletter, FinFacts, to which every aspiring commercial loan broker should subscribe.

Think back to that wonderful musical, "Grease."  On the last day of high school, the kids came running out of Rydell High School and broke into the song, "We'll Always Be Together."  Oh, the pure joy of summer vacation!   Warm days.  Blue skies.  It's hard not to feel euphoric

That's how we all feel right now, being released from quarantine, and it has me worried.  There is a gawd-awful amount of bad news out there, and I fear that investors, in their emotional euphoria, are ignoring it.

Emotions play a huge role in economics.  [Please read that last sentence again.]  During the latter half of the Great Depression and afterwards, the economic disciples of John Maynard Keynes, known as Keynesians, tried to apply mathematical formulas to macroeconomics - the study of the big stuff in the economy, like the rate of growth, the direction of interest rates, and the likely unemployment rate.

Keynesian economic formulas worked pretty well, if not perfectly accurately.  They at least pointed us in the right direction, like the need for fiscal policy to end the Great Depression.  Fiscal policy (think deficit spending) refers to the use of government spending and tax policies to influence economic conditions, especially macroeconomic conditions, including aggregate demand for goods and services, employment, inflation, and economic growth.

President Franklin Delano Roosevelt ("FDR") grasped the importance of emotions in economics.  "The only thing we need to fear... is fear itself."

FDR also understood the need to create jobs during the depths of the Great Depression.  His New Deal created such agencies as the Works Progress Administration (WPA) and the Civilian Conservation Corps (CCC), which dispensed emergency and short-term governmental aid, provided temporary jobs, employment on construction projects, and youth work in the national forests.  He also created the Tennessee Valley Authority, which built a number of hydroelectric dams and provided desperately needed power to middle America.

Before 1935, the New Deal focused on revitalizing the country’s stricken business and agricultural communities.  To revive industrial activity, the National Recovery Administration (NRA) was granted authority to help shape industrial codes governing trade practices, wages, hours, child labour, and collective bargaining.

This is pretty funny:  The U.S. Supreme Court eventually struck down the WPA and the CCC as unconstitutional, and when it was poised to strike down the National Recovery Administration, FDR told them, "Listen, Buckos, the country needs this economic help.  If you interfere one more time with the New Deal, I am going to stuff the Supreme Court with five new justices dedicated to making your weak-ass, obstructionist votes irrelevant."  Maybe he used kinder, more gentle words, but the Supreme's got the message.  The Commerce Clause of the U.S. Constitution, and hence the power of the Federal government, was greatly expanded as a result.

Now please don't get lost in this long, boring economic history.  I am leading you to an understanding of the importance of group emotions in economics and why you need to be pretty careful right now with your retirement savings.

The Keynesians ruled the roost among economists for decades, until President Richards Nixon took the U.S. off the gold standard in 1971 and until the first Arab Oil Embargo in 1973.  Suddenly, inflation was everywhere.

Nobel Prize winning economist, Milton Friedman, the patron saint of the Monetarist School of Economics, became the economic star of the hour.  He once famously said, “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.”

Milton Friedman was also full of poop.  The Fed created... are you ready for it... FOUR FLIPPING TRILLION DOLLARS in new money during the Great Recession, and yet inflation went nowhere.  We could barely keep inflation positive.

Modernly, the Austrian School of Economics is the rising star.  The Austrians scoff at idea of charts and graphs (not really, but please humor me here for the sake of simplicity).  The Austrian School instead advances the proposition that social phenomena, like the confidence of consumers and business owners, is the greatest single influence on economies, and social phenomena results exclusively from the motivations and actions of individuals.  "It's the Little Guys, Stupid."

If banks are feeling confident enough to lend, and if consumers and small business owners are feeling confident enough to borrow, the money multiplier can expand to as high 12 times.  The Money Multiplier is the ratio of outstanding bank loans (the best measure of the country's money supply) divided by bank reserves at the Fed.

While snorkeling in Mexico 25 years ago with my two young sons,
a Moray eel lunged at me out of a reef.  I backed out quickly,
and to this day, my boys joke that I abandoned them.  Haha!

Guys, this Practice Course is my finest work.  Get me
10 commercial real estate loan officers working for BANKS,
and I'll give you the course for free (gotta pay shipping).

The Money Multiplier has a huge influence on inflation, and we desperately need inflation.  The Money Multiplier has fallen from a high of 12 thirty-years ago to just 4 today.  And this is with the public euphoric right now.

What happens when the news from China shows that their economy is crumbling?  China was the great new market for companies worldwide.  Today?  Not so much.  We sell lots of products to Brazil, for example.  What happens when Brazil's sale of raw materials to China falls by 60%.  Will they have enough dough to buy our products?

My friends, the forces of deflation are massing on our borders.  Today's current euphoria among investors is the driving force of this latest stock market rally, not earnings!  The news should start appearing, in the next two-and-half weeks, that China got b-slapped by this virus and by the world's reaction to their cover-up.  (I actually think that they did a helluva job with very incomplete information.)

I might be as full of beans as Milton Friedman (the Monetarist guy).  But I think this current stock market rally is being driven by the happy students of Rydell High School.  Be careful out there.  This stock market could fall 45% from here.

The good folks at George Smith Partners, in their FinFacts newsletter dated May 13, 2020, wrote:

"Some more green shoots are visible as the bridge lenders are starting originations also.  The warehouse lending market (big banks lending to debt funds) has started up again, with more cautious leverage.  The warehouse lenders will also monitor loan collateral more closely."

George Smith Partners is an old-time commercial mortgage banking firm.  The difference between a commercial mortgage banker and a commercial mortgage banker is that commercial mortgage bankers service many of the loans that they originate, normally for life companies.

The money in commercial real estate finance ("CREF") is in loan servicing fees.  As I often say, "It's the loan servicing fees, silly."   An easy way to remember this is that mortgage bankers are rich, and mortgage brokers are poor.  Want to start earning huge loan servicing fees?

So where do debt funds get their dough their large commercial bridge loans.  We are talking here about bridge loans from $5 million to $100 million.

You may recall that this is Evander Holyfield, the former world
heavyweight champion.  Mike Tyson bit off part of his ear.

The general rule is that the sponsors of a debt fund will put up several million dollars of their own dough.  Then they will go out to wealthy individuals that they know, using a private offering, to raise, say $200 million.  They will make, say, $160 million in bridge loans.

Then they will go to a commercial bank and pledge the first mortgages in their portfolio for a $200 million to $250 million line of credit, giving them $400 million to $450 million in lending capital.

As the debt fund makes a profit, some of the earnings are retained as equity, giving the debt fund the ability to borrow even more.

But where do the sponsors of the debt fund go to raise their original $200 million?  Who invests equity into a debt fund?  The answer is mostly wealthy investors, family offices, hedge funds, and opportunity funds.

But what is a hedge fund?  A hedge fund is a limited partnership of investors that uses high risk methods, such as investing with borrowed money, in hopes of realizing large capital gains.  Investopedia defines a hedge fund as an aggressively managed portfolio of investments that uses leveraged, long, short and derivative positions.

There are two cool things about a hedge fund.  First of all, these public offerings do NOT have to be registered with the SEC.  Registration is a phenomenally expensive process, required before a company can go public, that involves extensive audits going back several years and immense legal documents.  The process can take almost two years, and the up-front cost is well in excess of $1 million  There are also ongoing legal costs of another $1 million per year.  Yikes.

Geez, I hope this was photoshopped.

Now remember, hedge funds do NOT have to be registered.  Why?  Because every investor in a hedge fund needs to an accredited investor, i.e., have a net worth, exclusive of his personal residence, of at least $1 million.  The SEC assumes that accredited investors are either smart enough to understand the risk or can afford to pay an advisor.

The second cool thing about a hedge fund is that a hedge fund can publicly advertise for more investors.  They just need to make sure that every investor is accredited.  This freedom to advertise is a huge deal.  

So what is an opportunity fund?  An opportunity fund invests in companies, sectors or investment themes depending on where the fund manager anticipates growth opportunities.  In plain English, the manager invests wherever the opportunities lie.

Important note:  Opportunity funds often buy shares of stock in companies, known as equities.  In contrast, most hedge funds invest primarily in debt instruments.

Another difference between a hedge fund and an opportunity fund is that hedge funds investments are not publicly-traded investment instruments.  Opportunity funds, in contrast, are public offerings, offered to the general investing public.  In other words, you don't have to be accredited to invest in an opportunity fund.  Interests in opportunity funds are typically offered by insurance plans, mutual funds, and other investment firms.

Some opportunity funds focus on real estate itself, REIT's, and real estate debt instruments, such as mortgages, debt funds, mezzanine debt, and preferred equity.

Another concept to grasp is the concept of one fund investing in another fund.  A hedge fund might invest in a debt fund.  An opportunity fund might invest in a debt fund.  Therefore most debt funds are a fund of funds.

Now where the debt fund makes its dough is that it can often borrow for as little 3.5% to 4.0% and then make loans at 6% to 9%, plus loan fees.

Clearly debt funds are leveraged, and if the bank holding its credit line gets freaked out and calls its line of credit, the debt fund could be forced into liquidation.  The recent report by George Smith Partners that the warehouse lending market is loosening up is great news for debt funds and the availability of large commercial bridge loans.

This quarantine has been hard for everyone.

Commercial Mortgage Rates Today:

Here are today's commercial mortgage interest rates on permanent loans from banks, SBA 7a loans, CMBS permanent loans from conduits, and commercial construction loans.

Be sure to bookmark our new Commercial Loan Resource Center, where you will always find the latest interest rates on commercial loans; a portal where you can apply to 750 different commercial lenders in just four minutes; four HUGE databanks of commercial real estate lenders; a Glossary of Commercial Loan Terms, including such advanced terms as defeasance, CTL Financing, this strange new Debt Yield Ratio (which is different from the Debt Service Coverage Ratio), mezzanine loans, preferred equity, and hundreds of other advanced terms; and a wonderful Frequently Asked Questions section, which is designed to train real estate investors and professionals in the advanced subject areas of commercial real estate finance ("CREF").

Did you bookmark it?

Beer Drinking With George:

Two weeks ago I held my first Zoom beer drinking session to just chat, share, and gossip about the amazing happenings in commercial real estate finance.  There was no cost to attend, but each of our 38 attendees was required to hold up a beer, a wine, or a mixed drink to show that he or she grasped the spirit of the occasion.

I was thrilled to see - one hour and forty minutes later (it was only supposed to last 40 minutes) - that 31 guys and ladies were still on the line.  I hope you guys had as much fun as I did.  Oh, the hangover...

I'm getting ready to hold another Zoom beer drinking meeting in the coming days.  If you would like to attend, please write to me, George Blackburne III (the old man), at george@blackburne.com for your Zoom instructions.

I literally get 1,350 emails every single day, seven days per week, so it is please VERY important that your subject line read, "Beer Drinking With George."

The time to buy is when there's blood in the streets.
— Baron Rothchild, 1815, Member of the Rothchild banking family.

There is an interesting story about this quote. Baron Nathan Rothchild was one of five sons of Mayer Amschel Rothchild.  Mayer was the founder of the famous and incredibly wealthy Rothchold banking family.  They made Sam Walton's kids (Wal-Mart) look middle class.

Each of Mayer Rothchild's five sons headed up a huge merchant bank in a different country.  Nathan Rothchild headed up the Rothchild Bank in Britain.

One way the Rothchild's made big money was by syndicating huge bond offerings for their respective national governments.  There have even been suggestions (probably untrue) that the Rothchild's encouraged war between countries so that each son could earn huge bond syndication fees selling war bonds.  George IV is in California, and Tom is here with me in Indiana.  Maybe I should encourage a big snowball fight between the states, and then have The Boys sell ice makers to each side.  Haha!

Okay, so the year was 1815.  Napoleon had just escaped from the Island of Elba, and the French king kept sending army after army to snuff out Napoleon’s little rebellion.  Napoleon had started out with just 30 members of his old Imperial Guard, but as soon as any French force would march on Napoleon, the troops would let out a great cheer, turn around, and join Napoleon’s side.  “Would you fire on your Emperor?” he once asked Marshall Ney.  Finally Napoleon sent a message to the restored Bourbon king, “There is no longer any need to send more armies after me.  I have all the troops I need.”  Haha!

The restored Bourbon king fled, and for the next 100 days, Napoleon mobilized all of France.  He reassembled the Grande Armeee, an army of 100,000 men.  The British, the Prussians, the Austrians, and the Russian were totally freaked out.  They had just fought Napoleon for almost twenty years, and they had finally defeated him.  Why won’t this little sucker just die?!

The aristocracy of Europe was gathered in Belgium to party, dance, and divide up the spoils.  Beautiful women, in fancy gowns, danced with their handsome officers to a wonderful orchestra - until a messenger staggered into the ballroom.  “Napoleon has stolen a march on us.  He has defeated the British at Quatre Bras.  Our army is in full retreat.”  Women screamed.  Some passed out.  Officers scurried everywhere.  The Duke of Wellington, who had never been defeated in battle, famously commented, “I have been humbugged.”

Wellington marshaled his beaten, but unbroken, troops, and emplaced them on the reverse slope of a row of hills overlooking the little town of Waterloo.  Placed there, Napoleon could not accurately aim his famous artillery at them because his gunners couldn’t see the British troops.  They had to fire blind.  The next day, as the Prussians rushed to help Wellington, Napoleon sent infantry division after infantry division marching up those hills.  Each time, the British drove them back.

I really admire Wellington because, even though he was personally a cold fish, he took wonderful care of this troops.  He had them lay down to present the smallest possible target to Napoleon’s endless artillery cannonade.  The French cavalry tried charging the British infantry, but the incredibly brave Redcoats quickly formed into squares and presented the French cavalry with a bristling wall of bayonets.  Horses will not commit suicide by hurling themselves onto bayonet points, so six different cavalry attacks came to naught.

But each time the Redcoats formed square, they became a perfect target for Napoleon’s artillery.  Thousands of brave British boys were blown to pieces, and as the Redcoats formed square each time, the squares became smaller and smaller.  Finally, the British were ready to be broken.

The Shark Dentist, aka "Stumpy"

“Vive L’Empereur,” shouted Napoleon’s never-beaten Imperial Guard, as they marched up that apparently deserted hillside.  When they were almost to the very top, with victory just steps away, Wellington shouted, “Stand up!”  The exhausted and decimated British survivors rose up like ghosts out of the mist and formed their famous "thin red line.”

Napoleon’s columns were twelve men across and hundreds deep.  The dense formation was designed to punch through any enemy line, but only a few Frenchmen could fire their weapons from this formation.  Wellington’s thin red line had only two men to a file, and every man could fire.  They wrapped themselves around the head of the French column and fired volley after volley into it.  The fresh French troops were stopped cold.  “Fix bayonets!” shouted the few surviving British officers, who had bravely stood in place as their troops had lain down.  “Charge!”

The Imperial Guard broke and ran.  After the battle, Wellington made his laconic but famous comment, “It was a close-run thing.”  Four days later, Napoleon surrendered for good.

Nathan Rothchild had been hard at work as well.  His pre-assigned agent jumped onto a fast mail packet the instant the Battle of Waterloo was over, so Nathan had a jump-start on the markets.  At the time, Consols - the British equivalent of Treasury bonds - were struggling because of the British loss at the Battle of Quatre Bras the day before.  Who wants to own the debt of a country that is about to be overrun by Frenchmen?

Taking advantage of his prior knowledge, Rothchoild started to sell Consols short in huge quantities.  “Oh, my God. Rothchild knows.  Rothchild knows (that we lost at Waterloo).  Sell my consols at any price!” shouted hundreds of traders. …  A terrible run on Consols began.

Until Rothchild suddenly changed position and bought up enormous quantities of Consols for pennies on the dollar.

I am not telling you guys to run out and buy stocks because there is blood in the streets.  In three weeks, I predict that the new, hot story in the final press might very well be about how orders from China, the world's second largest market, are down by 60%.  This may initiate the second down leg in the stock market, which I fear will bring us about 20% lower than our recent lows.

No, I wrote this article for for my private investors, urging them to snap up our hard money first trust deeds.  

"Right now just about every bank in the country - almost all 4,000 of them - is out of the commercial mortgage market.  While commercial loan demand has plummeted, we are seeing some very, very attractive deals."

"Folks, you have to be smart.  Until this crisis, 4,000 commercial banks and another 5,000 credit unions were competing against us in the small balance commercial loan market.  Poof!  They were suddenly and completely gone.  For the next few months, we have the market largely to ourselves."

Commercial Mortgage Rates Today:

Here are today's commercial mortgage interest rates on permanent loans from banks, SBA 7a loans, CMBS permanent loans from conduits, and commercial construction loans.

Be sure to bookmark our new Commercial Loan Resource Center, where you will always find the latest interest rates on commercial loans; a portal where you can apply to 750 different commercial lenders in just four minutes; four HUGE databanks of commercial real estate lenders; a Glossary of Commercial Loan Terms, including such advanced terms as defeasance, CTL Financing, this strange new Debt Yield Ratio (which is different from the Debt Service Coverage Ratio), mezzanine loans, preferred equity, and hundreds of other advanced terms; and a wonderful Frequently Asked Questions section, which is designed to train real estate investors and professionals in the advanced subject areas of commercial real estate finance ("CREF").

Did you bookmark it?

Beer Drinking With George Tonight

Tonight (May 4th) at 5:00 p.m. Eastern Time, I am going to hold a Zoom BS session to just chat, share, and gossip about the amazing happenings in commercial real estate finance.

There is no cost to attend, but I would really like it if each of you would hold up a beer, a wine, or a mixed drink to show you truly grasp the spirit of the occasion.  This chat is supposed to be, first of all, fun; but I suspect we will all learn some interesting things as well.

There is no fixed agenda.  This is not a training class.  I'll make a few observations about how to survive and prosper in a weird market like this, but after that, the floor is open to anyone to chat about anything related to commercial real estate finance.

To get into the meeting, please write to me, George Blackburne III (the old man), at george@blackburne.com for your Zoom instructions.

I literally get 1,350 emails every single day, seven days per week, so it is please VERY important that your subject line read, "Beer Drinking With George."

We have 31 people signed up for tonight, and I am going to cut it off at 35.  If you don't get an invitation, I'm sorry, but you missed the cutoff.  You'll just have to get drunk on your own.  Darn!

I am using the free version of Zoom, so they will cut me off after only 40 minutes.  I urge those of you who have signed up not to be late.  It would be great if some of you could please bring either some hot commercial lenders to recommend or some related observations to share.  Thanks!

One of the things I miss about working in San Jose, California years ago is that after work, the guys in my lending industry would meet for a beer.  I would often learn more from my buddies in one beer session than I would from weeks of actually working in the industry.

I miss those days.

Therefore this Monday, at 5:00 p.m. Eastern Time, I am going to hold a Zoom bullshit session to just chat, share, and gossip about the amazing happenings in commercial real estate finance.

I truly believe that this is one of the greatest money-making opportunities of our lives. The competition has been devastated, leaving the whole market ripe for us commercial loan guys.

There is no cost to attend, but I would really like it if each of you hold up a beer, a wine, or a mixed drink to show you truly grasp the spirit of the occasion.  This chat is supposed to be, first of all, fun; but I suspect you'll learn some interesting things as well.

I have no idea idea if any of you guys will be interested in just sitting around drinking for awhile, so maybe only two or three of us will show up.  On the other hand, perhaps many of you are as bored as I am.  Maybe there will be ten of us.

There is no fixed agenda.  This is not a training class.  I'll make a few observations about how to survive and prosper in a weird market like this, but after that, the floor is open to anyone to chat about anything related to commercial real estate finance.  

To get into the meeting, please write to me, George Blackburne III (the old man), at george@blackburne.com for your Zoom instructions.

I literally get 1,350 emails every single day, seven days per week, so it is please VERY important that your subject line read, "Beer Drinking With George."

Once again, there is no cost to join us; but you are expected to knock back a few drinks, just to keep the jokes and laughs coming.  We're all just a few buddies meeting for a beer after work.  You even get to tell your wife, "Honey, I know its only 2:00 p.m. on the West Coast, but George is making me drink."  :-)

I'll ask everyone to turn on their cameras, so we can bond.  I'll be wearing sweat clothes, and I'll have bed hair, so please don't worry about your appearance.  Ladies, feel free to wear your bikini's, as you visit Porcho Myarda. :-)

Once again, to get into the meeting, please write to me, George Blackburne III (the old man), at george@blackburne.com for your Zoom instructions.  Please make sure your Subject Line says, "Beer Drinking With George."

Commercial Mortgage Rates Today:

Here are today's commercial mortgage interest rates on permanent loans from banks, SBA 7a loans, CMBS permanent loans from conduits, and commercial construction loans.

Be sure to bookmark our new Commercial Loan Resource Center, where you will always find the latest interest rates on commercial loans; a portal where you can apply to 750 different commercial lenders in just four minutes; four HUGE databanks of commercial real estate lenders; a Glossary of Commercial Loan Terms, including such advanced terms as defeasance, CTL Financing, this strange new Debt Yield Ratio (which is different from the Debt Service Coverage Ratio), mezzanine loans, preferred equity, and hundreds of other advanced terms; and a wonderful Frequently Asked Questions section, which is designed to train real estate investors and professionals in the advanced subject areas of commercial real estate finance ("CREF").

Did you bookmark it?

In negotiating an income property loan, the size of loan the borrower can obtain is usually more of a sticking point than the rate or the loan fee.  

Since income property loan sizes are generally limited by the debt service coverage ratio (i.e., cash flow), rather than the loan-to-value ratio, the operating expense figure that the lender uses in his calculations is critical.

Suppose a property has the following Pro Forma Operating Statement:

ABC APARTMENTS
1234 MAIN STREET
SAN JOSE, CALIFORNIA

PRO FORMA OPERATING STATEMENT

Income:

Gross Scheduled Rents $100,000
Less 5% Vacancy & Collection Loss 5,000

Effective Gross Income: $ 95,000

Less Operating Expenses:

Real Estate Taxes $12,500
Insurance 2,550
Repairs & Maintenance 5,890
Utilities 7,345
Management 4,865
Fees & Licenses 987
Painting & Decorating 3,986
Reserves for Replacement 1,900

Total Operating Expenses: 40,023

Net Operating Income: $54,977

Then we hereby define the Operating Expense Ratio as follows:

Operating Expense Ratio = Total Operating Expenses divided by
the Effective Gross Income

Using our example above:

Operating Expense Ratio = $40,023 ÷ $95,000 = 42.1%

Appraisers and professional property managers often keep track of the operating expenses of the buildings they appraise or manage, and they publish their results. For example, the National Association of Realtors publishes the results of their surveys annually in several hardbound books including Income and Expenses Analysis-Apartments and Income and Expense Analysis Office Buildings.

Lenders have access to these type of publications, and they therefore are reluctant to accept at face value operating expenses supplied by the borrower when their operating expense ratios are less than those experienced by similar buildings in the area.

While it might be possible to operate an apartment building IN THE SHORT RUN at an operating expense ratio of less than 30 to 45%, in the LONG RUN, the end result will be a seriously deteriorated building.

It might be possible to get a lender to accept an operating expense ratio as low as 28% on a very new building, if it had fewer than 10 or so units, and if it had no pool and very little landscaping, and if you had authentic source documents to back up your claim. But in general, lenders will very seldom accept an operating expense ratio on apartments of less than 30 to 35%, and have been often known to use 40 to 45%.

The following are factors that will influence the lender to use a higher operating expense ratio:

1. Lack of individual metering of utilities
2. Swimming pool
3. Elevator
4. Extensive landscaping
5. Low income area and/or tenants
6. Presence of families with children

The larger the project, the larger the required operating ratio.  Large projects usually entail extensive recreational facilities and pools, and they often require full-time on-site management teams.

Operating expense ratios are not as useful in evaluating most commercial or industrial properties.  The reason why is because the space can be rented on a triple net basis, a net basis, or a full service basis.

Certain commercial properties, however, have surprisingly predictable operating expense ratios"

1. Self storage facilities:  25%
2. Mobile home parks:  25%
3. Non-flagged hotels and motels:  50%
4. Flagged hotels:  60%
5. Residential care homes:  85%  (food, nurses, etc.)

Never knew I had a gas mask fetish, but... wow.  :-)

If you are a commercial loan broker, and you are not calling every commercial real estate loan officer, working for a bank or credit union, within 20 miles of your office, you are missing out one of the biggest feasts in commercial real estate finance ("CREF") in forty years.  Please grasp this concept: 

Almost every bank in the country is turning down almost every commercial loan request that it receives.  Helloooo?  What are they doing with these turndowns?  

These bankers would welcome anyone who could help them service their high-net-worth clients, especially since you will be taking the deals to a private money lender, like Blackburne & Sons, as opposed to a competing bank, which might steal their client.

Commercial Mortgage Rates Today:

Here are today's commercial mortgage interest rates on permanent loans from banks, SBA 7a loans, CMBS permanent loans from conduits, and commercial construction loans.

Be sure to bookmark our new Commercial Loan Resource Center, where you will always find the latest interest rates on commercial loans; a portal where you can apply to 750 different commercial lenders in just four minutes; four HUGE databanks of commercial real estate lenders; a Glossary of Commercial Loan Terms, including such advanced terms as defeasance, CTL Financing, this strange new Debt Yield Ratio (which is different from the Debt Service Coverage Ratio), mezzanine loans, preferred equity, and hundreds of other advanced terms; and a wonderful Frequently Asked Questions section, which is designed to train real estate investors and professionals in the advanced subject areas of commercial real estate finance ("CREF").

Did you bookmark it?

Gold prices are climbing due to DE-flation?  That makes no sense.  As you will see, it makes perfect sense.  Gold cannot default.

Gold is only a so-so hedge against inflation.  The reason why is because physical gold does not pay a dividend.  There are better hedges against inflation.  For example, real estate is a much better hedge against inflation because it produces net rental income, as well as appreciate in price.

But what about gold mining stocks during times of inflation?  They pay a dividend, don't they?  That's income.

Yes, they do; but gold mining stocks are investments in a company.  When companies compete, there are winners and losers.  You could have the right sector - gold mining stocks - and yet still take a loss, or at least lag the market, if you chose the wrong gold mining companies in which to invest.  Gold miners are not a pure play.

Okay, but what about a precious metals mutual fund or a precious metals index fund?  These might indeed be reasonable investments during a period of sustained inflation, but you would probably do much better in REIT's or commercial development companies.  Real estate offers a significantly higher cash flow.  

The bottom line is that gold is no better than a so-so investment during times of inflation.  

Where gold really shines is during times of DEFLATION.  What?  Huh?  "Why would anyone want to own gold when prices are falling?  I don't get it."  The reason why is because gold cannot default.

Most periods of deflation occur during financial crises, like the S&L Crisis, the Dot-Com Meltdown, the Great Recession, and now the Coronavirus Crisis.  A ton of companies fail during these financial crises, and these slumps seem to hit about once every twelve years or so.  

More than 1,000 savings and loan associations (S&L's) failed during the S&L Crisis.  Hundreds of highly-capitalized dot-coms, like Pets.com and Webvan, failed during the Dot-Com Meltdown.  Hundreds of financial firms, like Lehman Brothers, and manufacturing companies, like General Motors, failed during the Great Recession.   While the factories and the name survived due to a government bailout, the shareholders in GM were essentially wiped out.

Before we are done, hundreds and hundreds of otherwise successful companies will unfortunately fail during this Coronavirus Crisis.  Already the Fed has had to buy up hundreds of billions of dollars worth of junk bonds to keep major U.S companies afloat.  Despite the help of the Fed, thousands of bondholders will lose most, if not all of their investments.

Much of the wealth in America is invested in bonds.  Bonds are the debt of another.  Most of the assets held by our banks are loans, which are the debts of another.  Mortgage funds, hedge funds, and REIT's have huge investments in mortgage loans, once again, the debts of another.

What happens when these borrowers simply cannot make their payments?  How valuable is a bond from a company that just got downgraded from investment grade to junk status because the company is on the verge of failure?  Imagine if you were a bondholder of Lehman Brothers in 2008.  You would have suffered a near-total loss.

In a deflationary economic collapse.  Gold is a supermodel.  Gold is one of the few financial assets that is not the debt of another.  Gold cannot default.

Therefore, whenever you see the price of gold rising, when the price of most other financial assets is falling, look for a dangerous financial storm cloud somewhere on the horizon.

That storm cloud is the deflationary tidal wave that is poised to crash on our shores in about four more weeks.  Please note that I am assuming that the President, the Fed, and Congress will continue to do everything possible to shore up the U.S. economy.

Unfortunately, this imminent financial calamity is not anything that American financial authorities can prevent.  You could build the most seaworthy and stable cruise ship on Earth, but it won't protect you from some huge, rogue tidal wave

This tidal wave is coming from China.  Chinese demand for raw materials and fine products will shrink so far that tens of thousands of companies worldwide will flounder, as their second largest market suddenly shrinks to just a fraction of its former size.

If you have not read my article, A Huge Deflationary Tidal Wave is Coming Out of China, you simply must read it now.  You need to move to cash, if you don't want to lose half of your retirement savings.

In about four-and-a-half weeks, the new, hot story on Bloomberg, CNBC, and Fox Business will be about how far the demand for raw materials and goods by China has fallen.  By then it will be too late to save half of your savings.

The price of gold is rising.  Winter is coming.

Commercial Mortgage Rates Today:

Here are today's commercial mortgage interest rates on permanent loans from banks, SBA 7a loans, CMBS permanent loans from conduits, and commercial construction loans.  

Be sure to bookmark our new Commercial Loan Resource Center, where you will always find the latest interest rates on commercial loans; a portal where you can apply to 750 different commercial lenders in just four minutes; four huge databanks of commercial real estate lenders; a Glossary of Commercial Loan Terms, including such advanced terms as defeasance, CTL Financing, this strange new Debt Yield Ratio (which is different from the Debt Service Coverage Ratio), mezzanine loans, preferred equity, and hundreds of other advanced terms; and a wonderful Frequently Asked Questions section, which is designed to train real estate investors and professionals in the advanced subject areas of commercial real estate finance ("CREF"). 

Did you bookmark it?

Hilarious video:  Archie Bunker gets a close shave.

An amazing thing happened today in the oil markets.  Oil producers couldn't even give their oil away for free.  The price of oil fell to its lowest price in history.  

West Texas Intermediate crude for May delivery fell more than 100% to settle at negative $37.63 per barrel, meaning producers would pay traders to take the oil off their hands.  Huh?  What?

Oil is a commodity, and like many commodities, oil contracts sell on the futures exchange.  Producers, users, and speculators buy and sell oil contracts every business day.

Contracts for the delivery of commodities are settled on the 20th day of the prior month.  In other words, the final market price for May oil delivery was settled today, April 20th.

Since the start of the Coronavirus Crisis, oil demand has fallen by around 30 million barrels per day.  We were using around 100 million barrels per day before the crisis.  At the same time, oil producers have kept on pumping oil.  One reason why is because once you shut down a fracking well, you can never re-open it again.  

On the regular stripper wells, the cost to get the well producing is a sunk cost.  You can't get it back.  While it might take an oil price of $40 per barrel to eventually break even on your long-term investment, if you can even get $10 per barrel, it still makes sense to keep the well pumping.

But there is no place to put it all of this excess oil.  Just about every oil storage facility in the world is filled to capacity.  Supertankers are being used as floating storage facilities, at a phenomenal rental cost per month.  And still there is no place to store the new oil.

So oil producers now have to pay a negative $37 per barrel to get rid of it.  Can you imagine?

Do you remember when we all wished the Arabs would drown in their oil?  Well, the world's largest oil producer is now the United States.  Uh, oh.

This oil glut is really going to hurt the American economy, as hundreds of U.S. fracking wells across the country are forced to shut down permanently.  Tens of thousands (hundreds of thousands) of highly-paid American workers are going to lose their jobs.  A severe economic recession, if not an outright depression, is now pretty much written in stone. 

The truth is that the Saudi's did this to us.  U.S. oil production has severely hurt their oil revenue.  The cost of oil production here in the United States is around $30 per barrel, while it is less than $10 per barrel in Saudi Arabia.   

If oil settles around the $17 per barrel price fo the next several years, U.S. oil producers will be largely wiped out.  Once they are gone, Saudi Arabia can then raise the price back up to $70 per barrel.

The Saudi's are using this coronavirus crisis to drive our smaller oil producers permanently out of business, just like they drove many of our ethanol producers out of business fifteen years ago.

I say that we give Saudi Arabia and the European Union a six-month notice.  Guard Saudi Arabia and the Straits of Hormuz yourselves.  We're pulling out.  Forget these bums.

Quick funny:  Tomorrow is the National Home-School Tornado Drill.  Lock your kids in the basement until you give the all clear.  You're welcome.  Haha!

For the past two weeks, we have been discussing the fact that just about every commercial bank in the country is out of the commercial mortgage market.

The CMBS market remains broken for now too, although the Fed's recent purchase of billions of dollars worth of commercial mortgage-backed securities has helped to prevent a complete collapse of the CMBS market.  CMBS lenders will likely survive to lend again in a year or so.

ABS lenders are also out of the market.  You will recall that ABS stands for asset-backed securities, which are smaller securitizations of an eclectic collection of debt obligations.  An ABS pool might contain subprime auto loans, scratch-and-dent residential loans that have been kicked out of some regular securitization pools, aircraft loans and leases, equipment loans and leases, credit card loans, movie residuals, and non-prime commercial loans.

As a result of recent huge declines in the value of asset-backed securities, ABS commercial real estate lenders; like Silverhill, Velocity, and Cherrywood; are now out of the market right now.  

We also discussed how several hundred commercial hard money lenders nationwide are either out of the commercial loan market or have completely closed their doors.  The slaughter has been particularly bloody among those hard money shops that use a mortgage pool to fund their loans.

As soon as the coronavirus crash started, most of their private investors lined up to withdraw their money from these hard money mortgage funds.  This left these hard money shops with no new money with which to lend.  Suddenly they had zero loan fee income coming in, so they didn't have enough money to make payroll and to keep their doors open.

Bottom line:  When a borrower goes out searching for a commercial loan today, he is going to get turned away by just about every lender.  

Isn't this wonderful?!  As a commercial loan broker, you make your dough helping borrowers find commercial lenders.  When every bank in the country was making commercial loans, most borrowers didn't need you.  Now they do.

Commercial real loan officers, working for banks, are telling their prospective borrowers, "I'm sorry, but our bank is not making any new commercial real estate loans right now."  In other words, the bank is out of the market.

I can also tell you that, after having survived the S&L Crisis, the Dot-Com Meltdown, and the Great Recession, most commercial banks are going to remain out of the market for several years.  Whenever banks bolt to their hidey-holes, they come out very, very timidly.  

Those of you who have read and understood my articles about how the Multiplier Effect can sometimes work in reverse should be able to understand the huge deflationary pressures building in the U.S., as well as China.  You may not want to go "all-in" on the stock market, even though Gilead Sciences announced last night that their new therapeutic drug for the coronavirus is doing very well in a large trial.  That huge deflationary tidal wave from China is still coming.  Chinese small business owners have been traumatized, and a new drug does little to immediately restore their savings accounts.

You think it's bad now?  In 20 years, our country will be run by people home-schooled by day drinkers...

Since banks are turning down every new commercial borrower, it is therefore an incredible time to call bankers for their commercial mortgage turndowns.  The bankers will be grateful to have someone - anyone - to service their frustrated clients.

It also makes good sense to also tell these bankers that you will not be taking their good customers to some competing bank.  "All of your bank competitors are out of the market too."  Tell them that you have some reasonably priced private money with no prepayment penalty.

Make sure you gather the contact information on every commercial real estate loan officer working for a bank that you meet.   You can trade each bank commercial loan officer for either a free commercial mortgage underwriting manual, a free loan broker fee agreement, a free commercial mortgage marketing course, or a free regional copy of The Blackburne List containing 750 commercial lenders.

These trades are made under the Honor System.  Please don't cheat.  You can trade trade a banker for ONE of the above four goodies.  If you want all four goodies, please find me four bankers.

And this guy must work for a bank or credit union.  ABC Bank.  First National Bank.  Helloooo?  Banks have huge metal vaults with tens of thousands of dollars in cash on hand, right?  Mortgage companies are NOT banks.  You are not a commercial loan officer working for a bank.  You can't fill in your own name.  Nice try.  Sorry.

When this is over, what meeting do I attend first... Weight Watchers or AA?

Have you ever coveted my famous, nine-hour course, How to Broker Commercial Loans?  I will give you this course for free if you gather up twenty commercial real estate loan officers working for banks for me.

But where do you go to find these bankers to call?  Simple go to Google Maps and type in your office address.  In the Nearby field, type in "Banks".  Voila!

Since we can't eat out, now's the perfect time to eat better, get fit, and stay healthy.  Hellooo?  We're quarantined!  Who are we trying to impress?  We have snacks, and we have sweatpants.  I say we use them!  :-)

Commercial Mortgage Rates Today:

Here are today's commercial mortgage interest rates for permanent loans from banks, SBA 7a loans, CMBS permanent loans from conduits, and commercial construction loans.

Be sure to bookmark our new Commercial Loan Resource Center, where you will always find the latest interest rates on commercial loans; a portal where you can apply to 750 different commercial lenders in just four minutes; four huge databanks of commercial real estate lenders; a Glossary of Commercial Loan Terms, including such advanced terms as defeasance, CTL Financing, this strange new Debt Yield Ratio (which is different from the Debt Service Coverage Ratio), mezzanine loans, preferred equity, and hundreds of other advanced terms; and a wonderful Frequently Asked Questions section, which is designed to train real estate investors and professionals in the advanced subject areas of commercial real estate finance ("CREF").

Be sure to bookmark this wonderful, free resource.

Short video of twins recognizing themselves for the first time.  Pretty sweet.