Andres Aristizabal

Andres Aristizabal Commercial Real Estate Finance

I feel like I was at the every other day in June. It’s a coffee bar found in the back of a flower shop. Basically a cof...
07/21/2023

I feel like I was at the every other day in June. It’s a coffee bar found in the back of a flower shop. Basically a coffee speakeasy! Love the space and enjoy the coffee. Definitely worth checking it out. Thanks again to and his coffee shop list ☕️⁣
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Anyone else have recommendations for neat coffee bars like Ariston in the city?

Wire fraud - someone was asking me a little while back for a post relating to wire fraud. I’m working with an individual...
08/30/2022

Wire fraud - someone was asking me a little while back for a post relating to wire fraud. I’m working with an individual at a title company at the moment for a deal we’re working on, and thought that I would share the wire fraud warning that she has in her signature block (found it helpful). ⁣
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The four steps are meant to help prevent wire fraud, and were outlined as follows:⁣
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1.) Call, don’t email: Confirm all wiring instructions by phone before transferring funds. Use the phone number from the title company’s website or business card⁣
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2.) Be suspicious: It’s not common for title companies to change wiring instructions and payment info⁣
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3.) Confirm it all: Ask your bank to confirm not just the account number but also the name on the account before sending a wire⁣
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4.) Verify immediately: Call the title company to confirm the funds were received⁣
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I’ve worked on deals in the past where someone from the “title company” is looped into a settlement statement/closing chain. Wire fraud is very real my friends, stay alert! ⁣
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📸:

The only certainty in life is death and [property] taxes. ⁣⁣Property taxes are based on an assessed value, and if a prop...
05/05/2022

The only certainty in life is death and [property] taxes. ⁣
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Property taxes are based on an assessed value, and if a property is reassessed that means property taxes are being based on a new assessed value. In a majority of cases the reassessed value will be higher than the previous assessed value. That means that, for example, instead of annual property taxes of $100k/yr (as shown in last years tax bill/TTM) they would now be $300k/yr. ⁣
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The timing of a reassessment, and/or the trigger for a reassessment, is county dependent. Some counties reassess at sale, others reassess every year, etc. ⁣
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Some sponsors try to avoid reassessments through entity sales. An entity sale is basically buying the entity that holds the property in order to avoid having to record a new deed. The idea is that this will keep a reassessment from being triggered at sale for counties that reassess when there is a change of ownership. ⁣
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I have yet to find a situation where appraisers won’t account for a reassessment in taxes, regardless of an entity sale, but apparently it was the norm in OH up until not too long ago.⁣
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I’d be curious to know if there are currently any markets where an entity sale prevents an appraiser from accounting for a reassessment. If you do, I’d love to know what state/market in the comments below!

Part 2:⁣⁣The rate cap being purchased will likely be for the typical length of the initial bridge loan term of 2-3 years...
04/13/2022

Part 2:⁣
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The rate cap being purchased will likely be for the typical length of the initial bridge loan term of 2-3 years (initial term does not include extensions). That said, rate caps are a hedging mechanism and cost more when they cover a) a larger loan amount, b) a longer term, or c) a lower strike. If we focus on b) for a second we could see that a 3 year rate cap would naturally be more expensive than one for 2 years. Many of the sponsors for 3 year loan term requests, from what I’ve seen, will go back to the lender and request that the rate cap cover two years with a waived extension on the third year of the loan term (i.e 2+1+1+1 instead of 3+1+1). That way they aren’t paying the higher cost of a 3 year cap (coverage for third year, given uncertainty & other factors, seems to cause a significant jump in cost. Sometimes double cost of years 1 and 2 combined). Since the extension fee and requirements are waived for the third year what you really have is a 3 year loan term before any extensions that have extension fees & extension metrics that need to be met.

If you want to learn more about rate caps the Chatham website does a great job of explaining and providing information. They also have a rate cap calculator!

Hey guys! It’s been a little while since I’ve posted but I’m working on the lenders side now. I wanted to make a two-par...
04/13/2022

Hey guys! It’s been a little while since I’ve posted but I’m working on the lenders side now. I wanted to make a two-part post (was too long to fit into one) regarding something that I’ve been seeing quite a bit of recently: Rate caps 🧢 ⁣
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Bridge loans are short term loans that are I/O in nature (interest only). These loan are going to be on a floating rate as opposed to a fixed rate (meaning you won’t be paying a fixed amount for mortgage payments). One way to hedge against rising rates on a floating loan, especially in an environment with rising interest rates like the one we currently find ourselves in, is by purchasing an interest rate cap. A rate cap essentially keeps the interest rate from moving above a certain amount over the rate at closing, and chances are you’re lender might require you to get one from a reputable company (i.e Chatham). ⁣
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There are basically three aspects to a rate cap, these are: notional (amount), strike rate and term. The notional would essentially be the loan amount that is being covered by the rate cap. Strike rate could be, say, 2% which means that there will be a ceiling on the interest rate of 2% (strike) plus the lenders spread (their spread + index floor). Term will be length of coverage (I.e 3 year term for a 3 year loan term).

Shout out to my now golden ram graduate 👩‍🎓❤️⁣⁣Very well deserved - love you!
04/24/2021

Shout out to my now golden ram graduate 👩‍🎓❤️⁣
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Very well deserved - love you!

04/23/2021

Something to keep in mind when you’re looking for loans: you still need to provide personal financials (PFS') regardless of whether or not you're going for a recourse or a non-recourse loan.⁣
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People seem to be under the impression that they don't have to provide it for a non-recourse loan because they aren't personally guaranteeing the loan - that's not true. You still have bad boy carve-outs (standard for non-recourse loans) and your financial strength still needs to be determined. An understanding of the PFS also gives a lender a sense of how responsible you are as a borrower. You can maybe (maybe) get away with providing ball park figures on NW and liquidity for something like a term sheet, but you're going to have to provide one sooner or later.⁣
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That being said - I didn’t have a specific picture in mind for this post so check out this neat motorcycle cafe in my now favorite go-to towns in upstate NY (Hudson). If anyone knows me they know that I live off of ☕️⁣
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Didn’t have this for the first 24 years of my life and had it for the first time last weekend⁣⁣I don’t know who needs to...
04/18/2021

Didn’t have this for the first 24 years of my life and had it for the first time last weekend⁣
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I don’t know who needs to hear this, but if you haven’t had banana bread pudding you’ve been missing out! 🍌

Stop me if you’ve heard this one - a New York native and a New Jersey native go for a walk in Central Park 🌸
04/12/2021

Stop me if you’ve heard this one - a New York native and a New Jersey native go for a walk in Central Park 🌸

Had a very interesting call the other day regarding a CMBS loan we’ve been working on so I thought I’d share (a very con...
04/10/2021

Had a very interesting call the other day regarding a CMBS loan we’ve been working on so I thought I’d share (a very condensed version)⁣
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The borrowers were hesitant about the prepayment penalty (PPP) associated with CMBS loans - the partners planned on selling somewhere closer to the 7th year of the hold and were not interested in a yield maintenance or defeasance that comes with a CMBS. These two, as I’ve mentioned in a previous post, are the most expensive of the PPP’s. He was also surprised to know that the rates based on the 10 year term was less than the 7 yr - it makes sense because of the way these loans are structured. You’re cutting up this pool of loans and selling it off to investors - you wouldn’t want a whole bunch of 10 years with a couple of 7 years. The whole purpose of the heavy PPP is to deter the borrowers from paying the loan off earlier. You’ll often times find that these loans have an assumable feature where, if borrower does decide to sell at year 7, the new buyer would be able to assume the current loan. In a low interest rate environment, a low fixed rate loan in a future higher interest rate environment would be attractive. The only problem, as pointed out, would be that the buyer would have to put up more in equity for the purchase since the loan is being paid down. That was the argument for going with a swap loan (I can make a post about these later on).
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So as it stood, the feature that was making the CMBS loan was primarily the non-recourse aspect. What i wasn’t aware of until that call was that, at a lower leverage point, you’d be able to structure a CMBS loan to be I/O for the whole term of the loan if you come down to certain point on LTV. Another point brought up was that the yield maintenance would be significantly lower if interest rates went up in later years (a component of yield maintenance are treasuries). ⁣
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Have any of you worked on/dealt with any of these full term I/O CMBS loans? I’d love to hear about your experience with them if you have, if you were familiar with them before let me know in the comments!

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