Life Companies Stepping Up Commercial Lending

Life insurance companies are stepping up their allocations for commercial mortgages as banks have cut back on lending. That’s according to The New York Times, which highlighted this trend in an October article. According to the article, life insurance companies funded $15.7 billion worth of commercial mortgages during Second Quarter, the highest quarterly volume since 1965, when the American Council of Life Insurers began tracking this data.

The article highlights the advantages life insurers have in providing funding. They generally underwrite conservatively, meaning lending only to more credit-worthy borrowers and on quality, well-located properties. They keep loans on their balance sheets, in contrast to investment banks, which issue bonds against the loans.

Life companies also generally offer lower rates than banks on a non-recourse basis, and their portfolios tend to do well because of their conservative lending and active management. For instance, Fitch Ratings said that at the end of 2010, 99.6% of life insurance company mortgages were in good standing.

NBS Financial has cultivated relationships with life companies since our company was founded in 1932, and today we have relationships with more than 50 life insurance lenders. These lasting relationships allow us access to billions of dollars to fund all commercial property types. We also offer in-house loan servicing, and take great pride in the quality and performance of our $1.65 billion loan servicing portfolio.

In addition to representing life insurance company lenders, NBS Financial Services has represented banks, conduits (CMBS), pension funds and private equity. With access to various lending sources, NBS Financial has the ability to finance the entire capital stack.

Though today’s interest rates are historically low, the commercial mortgage market can change rapidly. Call your NBS Financial Finance Offi cer today to find out more about financing your commercial property.

Griggs Selected to Serve on MBA Board

NBS Financial Services President Ken Griggs has accepted a nomination to serve on the Mortgage Bankers Association (MBA) Commercial Real Estate/Multifamily Finance Board of Governors (COMBOG).

COMBOG is comprised of MBA member executives from around the nation representing all aspects of the commercial/multifamily real estate finance industry. COMBOG leads the strategic development of MBA's commercial/multifamily policy, and initiatives as well as best practices and standards. It represents the diverse interests of MBA's member companies through standing councils, which are led by industry leaders and supported by expert staff, and special work groups and task forces.

Griggs has served as a finance officer with NBS Financial since 1993. He has originated over $1 billion in finance transactions for a wide variety of property types throughout the Northwest and around the country. He has been recognized as NBS Financial’s Top Producer many times, and became the company’s President in June.

Espy Joins NBS Financial as Manager of Loan Servicing

Jan Espy, a longtime property manager in Portland, has joined NBS Financial Services as Manager of Loan Administration.

In this position, Espy oversees loan closings, payment collection, escrow and financial analysis, property inspections, assumptions and acquisitions, payoffs, maturities, lease analysis, insurance requirements, investor reporting and customer service, while supervising the loan administration staff.

Espy has extensive experience in the commercial real estate industry, and has managed more than 6 million square feet of retail, office and industrial properties in the Portland metro area during her career. She has expertise in budget preparation, monthly financial reporting, construction and service contract supervision, capital and tenant improvements, tenant and owner relations, monthly and quarterly investment reporting, and working closely with institutional investors. Prior to joining NBS Financial, she was a Senior Property Manager at Portland’s Kidder Matthews office.

Espy earned a BA in sociology from Washington State University, and studied accounting and business administration at Portland State University. She is a Real Property Administrator (RPA) and licensed Oregon real estate broker.

Patterson to Receive NAIOP Developing Leaders Award

Andrew Patterson, an Associate Finance Officer with NBS Financial Services, is a 2011 recipient of the NAIOP Developing Leaders Award, which honors young commercial real estate professionals from around the country for their valued contribution and commitment to the industry.

The Developing Leaders Award, which honors up-and-coming professionals who have distinguished themselves in their profession and show great promise as future leaders of the commercial real estate industry, will be presented on Oct. 19 at Development ’11, NAIOP’s annual meeting in Scottsdale, Arizona.

Patterson has been with NBS Financial since 2007. He facilitates the underwriting process on multi-million dollar loans for office, retail, industrial and multifamily properties. Patterson serves as the Washington chapter NAIOP Developing Leaders Committee Co-Chair, and has been a member of the NAIOP Washington chapter for nearly 5 years.

Siemer Joins NBS Financial's PDX Office

Justin Siemer has joined NBS Financial Services as an Associate Finance Officer. In this position, Siemer works closely with other members of the loan origination team to secure capital to satisfy clients’ needs through exclusive relationships with life companies, conduits, REITs and pension funds.

Siemer has extensive experience in commercial mortgage underwriting. He previously spent seven years at KeyBank Real Estate Capital. Most recently, he was a Senior Commercial Mortgage Analyst in Phoenix, where he was the lead analyst for an average of 25 loan originations exceeding $288 million annually. Prior to that, he underwrote loans on all types of commercial properties for KeyBank’s life insurance company and pension fund office.

Siemer earned a BS in finance and banking and an MBA with a management emphasis from the University of Missouri. He also studied abroad at the CIMBA campus in Asolo, Italy, where his focus was leadership and innovation management.

Leadership Transition at NBS

NBS Financial Services is ushering in a new era in its leadership, including its first female CEO.

Jan Robertson is now CEO of NBS Companies (the umbrella company that includes NBS Financial and three other divisions), while J. Clayton Hering (previously President) is Chairman of the Board. Ken Griggs is now President of NBS Financial.

Robertson’s career path has been unique. She joined NBS in 1981 in an administrative position, and quickly rose into management, becoming a partner in 1993. She has served as CFO since 2005. Robertson is involved in many industry organizations, including IREM and NAIOP. She is also a strong supporter of arts in education, holding leadership positions in organizations such as Young Audiences and the Regional Arts & Culture Council.

“Jan is simply the best person to run this company,” Hering said. “As CFO she’s had to make tough decisions, which she has ably done, while always keeping the well-being of our employees and clients first and foremost.”

As Chairman of the Board, a newly created position, Hering continue to be involved in areas like strategic planning, mentoring, business development and community involvement, but his role in day-to-day operations, like administrative functions, will be reduced.

Ken Griggs, NBS Financial's new President, is an experienced mortgage banker and managing partner. He has been with NBS Financial since 1993, and has frequently been a company Top Producer. Blake Hering, Jr. is now Principal, Director of Portland Production, and Mike Wood is Principal, Director of Seattle Production.

“The partners who are stepping into new roles have an incredible breadth and depth of experience,” Hering said. “This new leadership structure will spread out responsibility among them, which is a win-win for both the company and our clients.”

Henderson Arranges $20.2M for Tacoma's Pacific Plaza

Finance Officer Jeff Henderson has originated $20.2 million in permanent financing for Pacific Plaza, a LEED-Platinum office and retail project in Tacoma, Washington. Pacific Plaza has been recognized for its excellence in sustainability, and won the 2010 NAIOP Sustainable Development Award, a national award for a building renovation.

The transaction provided its share of challenges, according to Henderson. The property is in a secondary market, and is a condominium with partial owner/user space, with a master lease on the ground floor consisting of a grocery store that has yet to take occupancy in an unproven market.

“This deal was among the most challenging CMBS single-asset transactions to date in the new lending world,” Henderson said.

Because of the breadth and depth of NBS Financial’s capital resource relationships across the country, Henderson was able to find the right lender for the deal.

“We had to show the lender why the increased market vacancy, due to the departure of Russell Investments, should not be a detriment in underwriting this deal,” Henderson said. “At the end of the day, this is an outstanding asset with stable income, and we helped the lender recognize that.”

As the capital markets continue to go after the best of asset class, lenders are starting to look in secondary markets for opportunities.

“There is actually a lot of money out there,” Henderson said, “and if we understand every aspect of the deal, how to mitigate risk, and add up all the components of value, we are better suited to help lenders get comfortable with the deal and help the borrower get the most dollars they can.”

Pacific Plaza, originally constructed as a parking garage, was redeveloped for office/retail use in a partnership between the City of Tacoma and Pacific Plaza Development, LLC. The renovation was completed in 2009, and sustainable features include a green roof, a rainwater collection system and an efficient heating and cooling system.

April Market Watch: Seattle Multifamily Market Poised for Growth in 2011

The Seattle metro area has one of the strongest multifamily markets in the nation, and a number of recent reports have focused on the market’s strength.

The Seattle apartment market has rebounded from the deepest recession in recent memory more quickly than many expected. At the height of the recession in fall 2009, vacancy rose to 7.2%, according to Dupre + Scott Apartment Advisors’ March 2011 Apartment Vacancy Report. Today, vacancy has fallen to 4.6%, and the company expects it to continue to decrease in the coming year. The market is showing other signs of stabilization: landlords are offering fewer concessions, and rents have begun to rise, though they haven’t yet gotten back to peak levels.

The Dupre + Scott report theorizes that persistent weakness in the single-family housing market is discouraging many from purchasing a house or condominium, which is one reason the apartment market is thriving. They expect that during 2011, apartment vacancy will continue to fall, rents will continue to rise, and concessions will essentially disappear.

Apartment Insights’ First Quarter Report provides similar predictions about the strengthening apartment market in 2011. It expects just 1,866 units to come online in 2011 and only about 2,000 in 2012. So development will ramp up during 2011, and many more units will deliver in 2013 and after.

The Seattle metro area placed fifth on Multifamily Executive’s list of the Hottest Multifamily Markets for 2011, or those where they expect the most development to occur. 3,692 multifamily permits were issued in Seattle in 2010, an impressive 57% increase over 2009.

NBS Financial Services not only arranges financing for multifamily properties, but can also secure financing for any type of commercial property, including office, industrial, retail, self-storage and hotel. In the past few years Fannie Mae & Freddie Mac have been most competitive on multifamily financing. More recently, life insurance company lenders’ spreads have compressed to be competitive with Fannie and Freddie rates. NBS Financial Services has lending relationships with life insurance companies, Fannie Mae, Freddie Mac, FHA, banks, credit unions, structured finance and specialized providers of mezzanine bridge and equity capital. With low interest rates and strong market fundamentals, now is a good time to refinance any commercial building.

Wood Arranges $4.2M for Wallingford Mixed-Use Property

NBS Financial Services Executive Vice President Mike Wood has arranged a $4.2 million loan for a mixed-use property that was formerly a school in the Wallingford neighborhood in Seattle. The lender was Symetra Financial, one of NBS Financial’s correspondent life insurance companies.

One challenge to obtaining financing was that Wallingford Center sits on land that is leased from the Seattle School District, and some lenders avoid lending on buildings with ground leases. However, the property’s desirable location in the densely populated Wallingford area, as well as its solid occupancy, made a strong case. The loan was 60 percent loan to value with an 8-year term.

“While the unsubordinated ground lease made the loan request more challenging, the lender was ultimately able to get comfortable with the real estate and the operator, which resulted in the borrower receiving very competitive loan terms,” Wood said.

The 42,177 sf Wallingford Center, which is listed on the National Register of Historic Places, was constructed in 1904 as Interlake Elementary School and served as a school until the 1970s, when it closed. The building then sat vacant for a number of years. The current owners purchased the building in 1984 and renovated it, with two floors of retail and 24 studio apartments on the top floor. The retail portion is more than 90 percent leased, and tenants include Trophy Cupcakes, Tweedy and Popp ACE Hardware, The Exploration Academy and 4 Your Eyes Only Optical.

NBS Financial Secures $6.9M from Life Insurance Company for Sacramento Office Building

NBS Financial Services Executive Vice President Ken Griggs and Finance Officer Paddy Ryan, in our Portland office, have arranged a $6.9 million loan for an office building in the Sacramento area.

The loan for the Cobblerock Office Building, a Class A, multi-tenant building in Rancho Cordova, a suburb of Sacramento, was funded by Symetra Financial, a life insurance company based in Bellevue, Washington. NBS Financial is consistently one of Symetra’s top producers nationally, and services its loans.

One unique aspect of the loan was that the property was only 82 percent occupied. In addition, two tenants occupied 79 percent of the building, with short-term lease expirations. The risk was mitigated with partial recourse, a strong submarket and tenant investment in their own tenant improvements, Griggs said.

With continuing uncertainty in the employment market and overall economy, lenders are cautious about office deals, especially in the Sacramento market, where office vacancy is estimated at between 20 and 25 percent.

“A conservative loan request with a strong borrower went a long way,” Griggs said.

Happy Anniversary, Norris, Beggs & Simpson!

Today marks the 79th anniversary of Norris, Beggs & Simpson's founding. The company was founded April 1, 1932, in the midst of the Great Depression, in Portland, Oregon. Starting out primarily as property managers, the company has grown into the full service operation it is today. For our 75th anniversary in 2007, we compiled some company history, which can be found here.

NBS Financial's Todd Harding Promoted to Senior Vice President

NBS Financial's Todd Harding has been promoted to Senior Vice President. The advanced title was awarded at NBS' annual awards banquet in January.

Todd began his mortgage banking career in 1986. He joined his family's firm, Harding Fletcher Company, and began underwriting real estate mortgages and becoming knowledgeable about construction components of commercial transactions through the tutelage of Portland’s brightest mortgage banking professionals. In 1990, Todd was named Vice President of Harding Fletcher Company in charge of all mortgage production for its Portland office. Todd came to NBS Financial in 1995 when the company acquired Harding Fletcher.

Todd was NBS Financial's 2008 Finance Officer of the Year, which recognizes the company's top producer. He arranges financing for office, industrial, retail and multi-family projects. He graduated from Linfield College and Portland State University.

NBS Financial's Ryan Promoted to Finance Officer

NBS Financial Services’ Paddy Ryan has been promoted to Finance Officer.

Ryan joined NBS Financial in 2006, and he and Executive Vice President Ken Griggs teamed up to provide financing for office, retail, industrial and multifamily properties through NBS Financial’s correspondent life insurance companies and other sources of funding. The team’s largest loan during 2010 was securing $16 million for Granite Park Regional, a single-tenant office building in Sacramento.

Ryan is a 2010 and 2011 member of the Oregon Mortgage Lenders Association (OMLA) Commercial Committee. His extensive sales and marketing career experience includes working as brands and marketing manager for Tesoro Refining and Marketing Company. He graduated from Menlo College in Atherton, California.

Hering, Jr. Named NBS Financial Finance Officer of the Year for 2010

Blake Hering, Jr. was named NBS Financial Services' 2010 Finance Officer of the Year at an awards banquet Jan. 22.

Blake has originated loans valued at more than $1.1 billion during his 11 years with NBS. In 2010, he arranged 10 loans valued at $64 million. He secured $14 million for the CH2M Hill Center (aka Parkside Center) in Portland. He also arranged $13 million for the Lodges at Lake Salish, a 200-unit luxury apartment property in Fairview, Oregon, and $7 million for the Alder Creek Apartments in Vancouver, Washington.

Blake is an executive vice president and partner in Norris, Beggs & Simpson Companies. He sits on the Advisory Committee for Nationwide Life Insurance Company, and is a board member of the Oregon Sports Hall of Fame. He is also active as a coach and board volunteer for youth lacrosse in Beaverton.

NBS Financial had a solid 2010: Our finance officers originated a total of 42 loans valued at just under $200 million, and our loan servicing department serviced $1.6 billion in loans.

NBS Financial Arranges $16M Loan for Sacramento Single-Tenant Office Building

NBS Financial Services' Ken Griggs and Paddy Ryan have arranged a $16 million loan for Granite Park Regional, a 149,000 sf office building in Sacramento, California.

Arranging financing for single-tenant buildings can be challenging, especially for a building as large as Granite Park Regional, as lenders see the risk of the building becoming completely vacant. The tenant is the County of Sacramento, which further complicated the transaction as its credit was recently downgraded due to the many challenges in California.

But Griggs and Ryan structured the deal creatively to satisfy lender ING Investment Management, one of NBS Financial’s correspondent life insurance companies. The loan is a 12-year loan with the rate fixed for the entire term at under 5 percent.

Being able to adequately structure a loan of this size for a challenging building suggests that the market is looking up, Griggs said. ING, like many lenders, temporarily stopped lending during the height of the recession, but has reentered the market and has set aggressive funding targets for 2011. The loan will be serviced by NBS Financial on ING’s behalf.

Positive Signs for PDX CRE During Fourth Quarter

NAI Norris, Beggs & Simpson has released its Fourth Quarter 2010 quarterly reports for office, industrial, retail and multifamily commercial real estate, as well as its economic report.

Office vacancy in Central City decreased to 11.78%, with a few significant leases. Suburban office vacancy fell slightly to 23.88%, with 121,056 sf absorbed. One of the larger leases of the quarter was ACS taking 30,656 sf at Triangle Pointe for a new call center. Vancouver office vacancy rose slightly to 18.7%.

Industrial vacancy fell slightly to 15.01%, with 108,375 sf absorbed. As one recent study showed, the industrial sector is a bright spot in Oregon’s economy, and the Port of Vancouver has recently seen heightened activity with BHP Billiton’s 60-acre lease.

Retail vacancy was stable at 6.4%, with 81,081 sf absorbed. The area’s first H&M opened in November at Pioneer Place, and H&M also leased nearly 20,000 sf at Washington Square. Ross Dress for Less and Dick’s Sporting Goods also signed significant leases during Fourth Quarter.

The Fourth Quarter ended with a flurry of multifamily investment sales. The $79 million sale of Ladd Tower and $70 million sale of the Palladia Apartments were just two of the significant sales of the quarter. Apartment vacancy also fell to 3.09%.

Full reports can be accessed here.