Commercial Loans Blog

Commercial Loan Closings and Tombstones

Posted by George Blackburne on Thu, Apr 4, 2013

Tombstone?  What on earth is a tombstone, and what does a tombstone have to do with commercial real estate finance?

First you'll need a little background.  Investment bankers - companies like Goldman Sachs and Merrill Lynch - are not allowed by the SEC to publicly advertise many of their investment offerings.  For example, let's suppose that Merrill Lynch is selling commercial mortgage-backed securities.  Merrill Lynch is not allowed to take out a big ad in the Wall Street Journal and say, "Hey, everybody, come and invest in our latest commercial mortgage-backed securities offering.  These CMBS bonds are paying 4%, and they are very, very safe."

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On the other hand, Merrill Lynch is allowed to boast about the successful placement (sale) of an investment offering. The investment banking company might boast in a huge advertisement in the Wall Street Journal something along the lines of, "Merrill Lynch is pleased to announce that it has successfully closed the sale of $1 billion worth of commercial mortgage-backed securities priced to yield 4.0%"

"Gee, George, such a big advertisement in the Wall Street Journal might cost $65,000.  That's an awful lot of money to pay just to publicly pat yourself on the back.  Why would they waste the money?"

Answer:  When investors see an advertisement like that, they think to themselves, "Gee, I wish I had invested in that deal.  I never even got to see it.  I'd better call Merrill Lynch and get on their distribution list so that I hear about the next offering."  Merrill Lynch then fields a bunch of incoming calls from hungry investors and lines them up to invest in their next offering.

When you see these ads in the Wall Street Journal, they are typically rectangular in shape, placed vertically of the page.  They look like tombstones, so hence the name.

Just like investment bankers, commercial mortgage lenders also like to boast of deals that they have recently closed.  In the old days, commercial lenders placed similar tombstones in financial newspapers and real estate magazines.  Modernly, most commercial lenders use email to publish a tombstone announcing their latest commercial loan closing.  In stark contrast to the $65,000 tombstone in the Wall Street Journal, email is almost free.

Now we come to the point of today's commercial mortgage finance training lesson.  Blackburne & Sons has recently enjoyed tremendous success using tombstones to market its commercial hard money lending programs.  Tombstones are proving to be even more successful than our entertaining and educational newsletters.  We now try to alternate between a tombstone and a newsletter every ten days.  Here is an example of one of our recent tombstones.

You don't have to be a commercial lender to publish an email tombstone to all of your clients.  If your little commercial mortgage company closes a nice commercial loan, I strongly urge you to send out an email tombstone to all of your contacts.  They seem to work better than any other form of commercial mortgage marketing that we have ever used.

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Topics: tombstone