Nationwide Commercial Loan Acquisitions
Business Acquisition Financing
The acquisition of another company using a significant amount of borrowed money (bonds or loans)
to meet the cost of acquisition. Often, the assets of the company being
acquired are used as collateral for the loans in addition to the assets
of the acquiring company. The purpose of leveraged buyouts is to allow
companies
to make large acquisitionswithout having to commit a lot of
capital.
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Where do you go when the Banks say No?
We are saying YES, when Banks are saying NO!
TYPES OF LBOS
LBOs are typically used for three purposes, each in the category of
corporate acquisitions generally. These are 1) taking a public company
private, 2) financing spin-offs, and 3) carrying out private property
transfers frequently related to ownership changes in small business.
Public to PrivateThe first situation arises when an investor (or investment group)
buys all of the outstanding stock of a publicly traded company and thus
turns the company into a privately-held enterprise ("taking private" in
reverse of "going public"). These deals may be friendly or hostile, the
two terms related to management's point of view. Friendly cases
typically involve the management buying the company for itself with
plans to operate it thereafter as a privately-held entity. Hostile cases
involve an investor or investor group intent on buying, reorganizing,
and then reselling the company again to realize a high return. The sale
of the company may be to another company or may be to the public in a
stock offering. In the last case the situation actually amounts to a
transaction more aptly labeled public-to-private-to-public.
There are other variants in the disposition or in the payback of a
third-party investor, although they tend to be rare, such as very high
dividend payments and recapitalization by other groups.
Spin-OffsPublic or private companies often wish to sell off elements of their
business to get cash. In some cases the seller may itself have been
bought in an LBO and is spinning off assets to pay the investors back.
In such situations the spun-off element's management may itself be the
buyer or may be passive in the transaction. An LBO is used to purchase
the subsidiary or division in question. The fundamental financial logic
of such deals, however, remains the same.
Private DealsThe last situation concerns cases where a privately held operation is
bought by an investor group. Such cases often arise when a small
businesses owner, having reached retirement age, wishes to divest him-or
herself of the company and either cannot find a corporate buyer or does
not wish to sell to a company. The buying group itself may be the
company's employees or individuals associated in some way with the
owner. These people organize an LBO because they only have limited
equity.
FINANCING AND PAYBACK
The target of an LBO must, almost by definition, be profitable,
growing, and produce a suitably large cash flow. In acquisitions jargon
this is often abbreviated as EBITDA, meaning earnings before interest,
taxes, depreciation, and amortization—the component elements of cash
flow as ordinarily defined. Why cash flow? Because repayment of the
large, leveraged debt is from future cash flows of the company.
Other assets, of course, are also taken into consideration. If cash
flow cannot keep pace with repayment, it is desirable that the company
has saleable components (e.g., potential spin-offs) or liquid assets.
Third party investors cannot be persuaded to put up cash unless the
numbers look good, the elements of the company seem easily saleable, the
company has lots of cash on its books, or all of the above are present.
The leveraged portion of the LBO may be as high as 90 percent of the
deal but can be lower. In periods of unusual frenzy, the percent has
even climbed above 90 percent. The rest is in the form of equity.
Multiple "layers" of financing are involved: senior debt, senior
subordinated debt, subordinated debt, mezzanine debt, bridge financing,
and finally purchaser's own equity. The instruments described here are
listed in increasing order of risk. In the case of a default, those
holding senior debt will be paid first, owners of equity last (if at
all); these security relationships are contractually built into the
instruments themselves. Mezzanine financing is a hybrid between straight
equity and debt, structured so that "mezzanine" holders are just barely
paid something in an extreme case where equity holders lose everything.
Bridge loans are short-term loans intended to be repaid either from the
acquired company's cash holdings or from rapid disposition of company
assets. Debt, of course, may be in the form of high-yield and therefore
high-risk "junk" bonds.
LBO risks are high because payback depends entirely on the company's
future performance. If the economy falters—or some event halts the
purchased company in its tracks (a major lawsuit, the loss of a major
account)—or if the high re-payments actually hamper the company by
starving it of capital, investors may see their money turn into thin
air. Healthy, growing, cash-rich companies purchased by an LBO
therefore may lose their flexibility by losing their cash and
simultaneously acquiring a huge load of debt: small shocks in the past
become large shocks in the present.
For these reasons investors expect
returns above 20 percent per annum.
RilCorp. Brokerage
operate as a secondary marketing firm specializing in the sale and
acquisition of commercial real estate mortgage loan(s), Mortgage, Trust
Deeds, Land Sale, Business, Yacht, & Aircraft Contracts, pools and
bulk portfolios welcomed, and much more... CLICK HERE
RilCorp. Brokerage represent Companies that provides loan sales, and
acquisition services for performing, sub-performing, non-performing and
distressed commercial loans.
As the demand for mortgage assets intensifies in
the secondary market, RilCorp. Brokerage is focused on:
identifying loans for sale, establishing new
relationships and utilizing our existing client base to maximize each loans
execution.
Our clients consist of Financial Institutions, Insurance Companies, Mortgage Banking
Firms, Funds, Private Investors, and other owners of commercial mortgage loans.
Please contact us, if you have a loan, pool of
loans, or bulk portfolio's available for sale; or if you have an interest in buying,
commercial mortgage loans, pools or bulk portfolios. Click Here
Our Firms actively pursues the following types of individual commercial real
estate mortgage loans, and bulk portfolios:
Commercial /
Industrial
Multi-family
(MF)
Retail
Office
Hotel / Motel (flagged or
unflagged)
Congregate Care
Specialty (Gas Stations, Churches,
Self-Storage, Mobile Home Park, etc.)
RilCorp. Brokerage represent Firms, that have facilitated loan sales, and purchases of commercial real estate
mortgage loans, up to $500 million, and portfolios in the billions.
Objective:
Provide discrete access to an exclusive
marketplace for buyers and sellers of commercial mortgage loans.
Transaction
Process:
The Companies we Represent, have transactions performing on a "negotiated basis" as opposed to a "sealed bid"
process. A Letter of Intent (LOI) is normally issued within 48 hours of receipt
of the loan information.
This allows sellers the advantage of only entertaining
only those offers that meet their pricing requirements and obtaining highest
value for their loans.
Purchasers prefer this method because it conserves
underwriting and due diligence resources.
Due Diligence &
Closing:
Following acceptance of the
LOI, due diligence and closing are usually completed in 4 to 21 business
days.
Loan Parameters:
All loan types
including: Commercial / Industrial, Retail, Office, Multi-Family, Hotel,
Congregate Care and Specialty (Gas Stations, Churches, Convenience Stores,
etc.)
April 21, 2009 - Tapping Hidden
Liquidity from an Existing Loan Portfolio
In today’s market, loan
sellers often overlook liquidity within their existing portfolio. Would it
surprise you to learn, that selling “loans you are not 100% comfortable with”
(i.e. maturing, pre-watch list and watch list commercial mortgage loans) can
provide higher executions than performing, or distressed commercial mortgage
loans?
Well guess what, today they can, and in most cases are!
RilCorp represent Companies that are demanding loan committees to keep this in mind as they
evaluate their commercial mortgage loan portfolios for loans that DO NOT reflect
their current internal comfort levels.
The sale of these loans will allow you
to redeploy liquidity as needed and will strengthen your balance
sheet.
This limited window of
opportunity for selling your commercial mortgage loans that DO NOT meet your
comfort levels is available now.
The bottom line is to ask
yourself, would you be willing to sell these loans for the right price today?
If so, please contact one of our representatives to discuss.
Here are the simple facts:
this newly released liquidity will permit you to re-lend at current market
rates, increase spreads and earn new origination fees while strengthening the
overall quality of your commercial loan portfolio.
Call us today to tap your
hidden liquidity from your existing commercial mortgage loan
portfolio!!!
April 2009 - FASB Changes Create a
Market for Maturing Seasoned Loans
RilCorp. Brokerage has an immediate interest in acquiring your maturing
commercial mortgage loans as FASB rule changes have created an opportunity for
mature commercial mortgage loans.
The ideal maturing commercial mortgage loan(s)
have performed as agreed; however interest in extending or re-writing matured
loans has diminished.
RilCorp's resources specializes in the secondary marketing of performing, matured
and distressed (sub-performing and non-performing) commercial mortgage loans
that are secured with commercial real estate.
March 2009 - First Quarter
Update:
As the end of the
quarter approaches,
RilCorp. Brokerage would like to take a moment to update you with new
opportunities we have for performing and distressed (sub-performing and
non-performing) commercial mortgage loans that you may have in your portfolio.
With buyers and sellers returning to the market, continued deterioration in the
real estate values, and personnel being stretched due to being reallocated to
areas of immediate concern, we offer several solutions to assist you with the
performing and distressed (sub-performing and non-performing) commercial
mortgage loans, including construction and development loans.
RilCorp. Brokerage only represent Companies that set
themselve's apart from the constant calls that bombard your offices, and burden your
resources because our business model is based upon private discrete negotiated
sales, long standing relationships, knowledge of the commercial mortgage market
and over 30 years of experience in secondary marketing.
1) For utilizing liquidity,
RilCorp represent Companies that has performing commercial mortgage loans available for sale with
excellent yields, with or without seasoning, and can identify loans specific to
your purchase parameters and present them to you for a “private negotiated
purchase.”
2) For achieving liquidity, RilCorp's resources, represents clients nationwide with low-cost of funds interested in
acquiring performing commercial mortgage loans at realistic executions.
A major
improvement from what the market has experienced in recent months with deep
discount buyers.
Our resources's clients, like you, have limited windows of
opportunity for acquiring loans, so we need to be kept informed on an ongoing
basis of what loans you may have available or considering for
sale.
We have companies that can assist you in
freeing up resources, as distressed loans increase and utilize more of them.
Here is how, as soon as a loan is categorized as problematic or of concern,
Worldwide can immediately arrange a private sale based upon an acceptable
indication of value.
A timely, discrete negotiated sale will optimize your
return by freeing up capital for loan acquisitions; based upon your purchase
parameters and position you for new loan originations.
In addition, resources
allocated to distressed loan workouts can return to income generating
activities.
Worldwide distressed buyers are indifferent to loan modifications
or owning the real estate and are categorized by geographic interests, property
types and loan sizes.
As such, please understand that Our resources need to see the loan,
and understand the entire history behind it, in order to price
it.
December 2008 Year-End
Update:
Yield requirements
for performing commercial mortgage loans in the secondary market are at decade
highs; making par and premium executions nearly impossible in the short-term,
with few exceptions.
Credit markets remain constrained, and lenders are
experiencing increased commercial mortgage loan delinquencies.
As a result, the
market is anticipating a rise in distressed commercial mortgage loans for
2009.
In the absence of a
normal market, Our resources have shifted their direction, and focus to assisting sellers at
mitigating losses from sub-performing, non-performing and distressed loans.
We
have companies that created a custom tailored solution which offers aggressive executions for
sellers on a regional basis.
In addition, RilCorp. Brokerage represent Firms, that focus on individual commercial
mortgage loans, as opposed to a pool or portfolio mentality, and identify buyers
that will maximize a loans execution.
Sellers receive the
highest executions possible and avoid the pitfalls associated with the mass
marketing of distressed loans.
How to get started,
first take a few minutes to review your commercial mortgage loan portfolio for
loans that you may want to sell in short-order.
This process will help you
prevent further losses, free up capital, recover loan loss allowances or
reserves and assist you in repositioning loan originations toward current market
yields.
Once the commercial mortgage loans have been identified, provide us with
the required loan documentation for performing, sub-performing, non-performing
or distressed commercial mortgage loans for an indication of value and / or loan
sale.
The format for the required loan information can be found in our October
2008 Update below.
November 2008 Market
Update:
The government has
decided not to buy loans from financial institutions.
This situation will
challenge financial markets and institutions to re-examine their ability to
manage liquidity and the direction of their businesses.
As such, the best option
available for increasing liquidity and returning to originations remains the
secondary market.
Our resources has several funds available that can provide liquidity at fair
market value for performing, sub-performing and non-performing commercial
mortgage loans, pool or portfolios.
Now is the time and window of opportunity to
start a sale that can actually close that will provide liquidity, portfolio
restructuring and the ability to originate new loans at current market
levels.
Alternatively, you
may want to know the fair market value of your loans, even if now may not be the
right time for you to sell. If that's the case, please give us a call.
October 2008 Market
Update:
Even with credit
remaining constrained we have the resources to provide liquidity via whole loan
sales of commercial mortgages.
We represent Companies, that have several funds aggressively acquiring
performing, and sub-performing commercial mortgage loans nationwide, excluding
raw land.
Please note seasoned performing loans are experiencing the highest
executions. Loan pool pricing options and documentation requirements for
indications of value are presented below.
Loan Pool Pricing Options:
- Performing
pools.
- Sub-performing
pools
- A blended execution
for performing and sub-performing pools.
Loan Pool Required Documentation:
Sub-performing -
Complete our spreadsheet (click here
to download), provide a brief history / summary on the loan with recent
updates, pay history, note, appraisal and rent rolls. ______________________________________________________________________________________
September 2008 Market
Update:
Credit continues to
tighten while risk based spreads continue to increase for commercial mortgage
loans.
Cooperation for overnight lending between banks is expected to improve as
consolidations and resolution for the existing credit crisis begin to take hold.
The need for liquidity still exists; while secondary marketing sales activity
for commercial mortgage loans is expanding at historic levels.
The best method
for managing liquidity in this environment remains whole loan
sales.
______________________________________________________________________________________
July 2008 Market
Update:
RilCorp. Brokerage, represent Companies that are very active in the commercial mortgage loan market, and
would like to take this opportunity to provide an update, and have companies take
a look at their existing portfolio to see if portfolio augmentation would be
beneficial.
Whether you are looking for liquidity, adjust geographic, or loan
type concentrations, enhance your weighted average coupon (RIL), or reduce
classified assets, we are available to discuss your
options.
Current market for
commercial mortgage loans:
Maintaining
liquidity remains critical because:
- Existing portfolio
weighted average coupons are narrowing as the costs of funds are
increasing (margins are decreasing even as credit risk spreads increase).
- Credit risk spreads
continue to increase as underwriting guidelines continue to tighten.
- Uninsured funds are
being siphoned out of institutions
- Portfolio
executions can be optimized as long as they are not mass marketed.
- Quiet, private
negotiated transactions that fall under the radar maximize executions.
- Recycling funds
through the sale of existing loans results in higher margins from fees and
re-lending at higher rates.
______________________________________________________________________________________
Our resources provides the following
strategic services:
- Sale/Acquisition/Participation of commercial
real estate loan(s) and portfolios, regardless of performance..
- Targeted loan
portfolio sales and acquisitions for liquidity, mitigating geographic and
product type concentration risk.
- Secondary marketing
services for Bank Holding Companies actively involved in Mergers &
Acquisitions.
RilCorp Companies, differentiates themselves from others by presenting a sellers' loan(s) to only one
buyer at a time on a, "for their eyes only" negotiated basis.
It has been our
experience that significantly higher executions are achieved when portfolios are
strategically marketed in this manner.
RilCorp. Brokerage welcomes the opportunity
to discuss your commercial loan needs and encourages you to contact one of our
representatives with questions or comments CLICK HERE
