Column Financial Collapses
COLUMN FINANCIAL, THE commercial real estate lending arm of Credit Suisse, officially closed its doors in late March, shutting down its remaining offices in Dallas, Los Angeles, and Chicago.
At its peak, the franchise was one of the most prolific conduit lenders and employed more than 370 people. The shutdown means that Credit Suisse is temporarily out of the commercial real estate debt game, as the company puts the Column Financial brand in mothballs until the debt markets stabilize.
In late January, Column Guaranteed, the agency lending arm of Column Financial, merged with Walker & Dunlop. The remaining Column Financial employees had planned to keep the franchise alive by continuing to do agency business through the Walker & Dunlop joint venture, while trying to raise a debt fund.
But the debt fund could not be raised quickly enough, leading Credit Suisse leadership to shut down the franchise.
“It's closed for now but they will use that franchise name again, subject to market conditions and their ability to raise the debt funds,” says Vic Clark, former managing director at Column, who closed the firm's first few loans and the first under the Walker & Dunlop joint venture.
Clark sent an e-mail to colleagues March 30 announcing the closing, the only “official” communication about Column Financial's shutdown.
Cap-and-Trade Could Help Apartments
WHEN PRESIDENT OBAMA announced his plan to institute a carbon cap-and-trade system last month, Enterprise Community Partners stood up and took notice.
The Columbia, Md.-based Enterprise has been quietly working on its own small carbon offset program for the past year—a way of both proving out the concept and also promoting green building in affordable housing developments.
As lawmakers get set to debate a federal cap-and-trade system, Enterprise said it will actively lobby for the inclusion of provisions that would benefit the multifamily industry. “We would argue that some of those proceeds should be invested in community-based programs or residential building,” says Dvora Lovinger, Enterprise's senior director of government affairs.
Under the Obama plan, the government would auction off carbon permits, which could net around $650 billion over the next decade. The administration has proposed using the proceeds from the auctions to give a tax credit to citizens to help offset utility cost increases.
But the proceeds may also be useful by helping to drive energy efficiency in existing multifamily properties. “We need to make sure that there's financing available to do retrofits, to really drive deeper energy effi- ciency in the building,” says Dana Bourland, a senior director at Enterprise. “If we can make buildings more energy-efficient, that's a much more sustainable approach than just covering the higher costs associated with our energy consumption.”
Distressed Assets Flood the Web
AS DISTRESSED ASSETS continue to pile up, several Web sites are offering multifamily and single-family investors access into specific buying opportunities.
The LFC Group of Cos. launched a new site in March that seeks to become an eBay for investors looking to buy and sell mortgage notes. The site, BigBidder. com, auctions nonperforming mortgage notes secured by commercial real estate, as well as a range of other loan types. “Just about anything can be sold in an online auction,” says Kelly Lovegrove, director of operations for the Newport Beach, Calif.-based LFC Group.
One company already well-established in the online distressed debt marketplace is Boston-based DebtX, and its site, DebtX.com. The company has a contract with HUD to sell the agency's distressed debt. In February, DebtX offered about $144 million in nonperforming multifamily and healthcare HUD loans. The company also has a contract with the FDIC to offer distressed debt from banks in receivership.
The advantage of an online auction site goes beyond transparent pricing, each company says. Buyers can peruse opportunities more quickly online, and sellers can get a higher price for their assets—more bidders often translate to bigger price tags. Plus, the process is expedited, with some transactions closing in 30 to 45 days. And since the online model offers lower transaction prices than standard auctions, it's economical to sell or buy loans as small as $1 million.
Indeed, the sites are on to something big—and have the traction to prove it. DebtX says its business doubled in the fourth quarter of '08 compared to the fourth quarter of '07.
Now, regional sites are also emerging. Take Condoreports.com, a start-up that zeros in on the struggling condo market in South Florida, providing detailed reports that include historical sales and listing activity on nearly 2,000 condo communities in Miami-Dade County. The site has seen a lot of traffic from institutional investors looking for discounted acquisitions, as well as lenders looking for clarity on underwriting criteria, according to the site's founder, Adam Cappel.