Niche lenders – like our credit unions (see my rate sheet at) are providing more and more liquidity for the not-so-stellar deals – or the smaller deals – that do not fit life company strict standards.  And of course we lend to those who do not want a heavy, draconian prepay penalty.  And, oh yes, we do construction loans for new bulls or gut rehabs.  So there’s cash out there, though it lies in unexpected places. See our current rates and programs — bringing cash to the “small” commercial market – at Rate and Program Summary Centennial Lending Commercial Mortgages January 2012

OK on to politics. Is the state of the union is getting stronger, as our President would have us believe?   Not with continuously falling housing prices, 13 million Americans out of work and a 1.3 trillion deficit it is not.   As my friend WSJ writer Lou Barnes said pithily this Friday, just half a day after the President’s speech,  the Fed announced an economy in such peril that its previously unprecedented aid would extend over the horizon.

Go to usdebtclock.org and tell me what you see.  We are carrying at this hour 15.3 trillion in debt.  $48,000 for every US citizen.  $135,000 for every US taxpayer.  And that mountain is going to grow by another $$1.3 trillion this year as we SPEND more that we can possibly TAKE IN. We SPEND 4.5 trillion, we COLLECT 3.2 trillion, we are short and remain so because no one of courage is in the White House and two few occupy the House and Senate. No one wants to tackle entitlements. Reckless spending, that’s the plan.

As the great former senator Alan Simpson said last Friday to the Wall Street Journal, Obama walked away from the solution proposed by his own panel.  He is in Simpson’s words afraid to confront the deficit.  Scared, in fact.  His words, this very wise man from Wyoming, not mine    The $3.9 trillion, 10-year Simpson-Bowles plan included about $2.2 trillion in spending cuts, $673 billion in reduced interest payments and $1 trillion in tax increases.  None of which was mentioned in the State of the Union.

Centennial Lending, whom I represent as senior Business Development Officer, is a credit union service organization owned by 13 credit unions in Colorado and Wyoming.  We lend in Colorado, Wyoming and Nebraska and finance” small” projects from as little as $100,000 up to $5 MM.  We like small retail centers, freestanding retail, office, industrial and retail condominiums, neighborhood centers, office buildings, industrial buildings and of course apartments from 5 to 100 units.   We also finance 1-4 unit rental housing.  We offer a 5+5 fixed rate and a 10 year fixed rate permanent loan, with no prepay penalty.  And construction financing for qualified projects. We also are experts on the SBA 504 and have financing up to 90% LTV for owner-user buildings.

Please click here to download our most recent rate sheet for commercial and multifamily construction and permanent financing:

Rate and Program Summary Centennial Lending Commercial Mortgages January 2012

And here are some of our recent closings

Success Stories by Centennial Lending

Contact Tim Thomas for more information, tim.thomas@centennial-lending.com, 303-746-9169

Yes, I write TWO blogs:  this one at www.sbafinancenews.com and www.coloradoloaninfo.com.

The 504 program is great because it enables you to get 90% financing in most cases – lower in some – with a combination first and second mortgage loan on your commercial building, or commercial condo, provided you have 2 years in operation, are “for profit,” and have a net worth for the business of under $15 MM and net profit of $5MM or less per year over the last two yours.  In other words, you need to BE a “small business.”

You can refinance your current loan(s) and/or buy a new building or commercial condo.

The SECOND trust deed loan is funded with a debenture, which is a form of a bond.  Bond investors need to know their yield is in place for a period of time, so in order to sell the debentures, the SECOND loan, which is actually the SBA 504 guaranteed loan, has a hefty prepayment penalty for the first half of the loan.  We’ll talk about this in more detail in future installments.

IF YOU BORROW from a bank or a credit company, chances are you will also have a large prepay penalty on the FIRST mortgage part of the 504.  Those penalties are (name your poison):

• The most popular: 5% the first year, 4% the second, 3% the third, 2% the forth, 1% the fifth
• Or you can have 5% flat for 5 years
• 7/6/5/4/3/2/1
• 5% for 6 years then 4/3/2/1
• Here’s one, I call it the rocket prepay: 10/9/8/7/6/5/4/3/2/1
• Or for the truly desperate, 10% a year flat for TEN YEARS

These penalties exist because your lender (the bank, let us say, ) either (a) wants to SELL your loan on Wall Street for a huge premium, or (b) just likes a large prepay penalty.

Now for the good news in this story: Credit unions.   Centennial Lending originates loans for our credit union owners.  We offer great fixed rate 504 first mortgage loans WITH A ZERO prepay penalty.  ZERO, ZED. NADA.  You can pay off our loan any time without any penalty.  You can pay DOWN our loan and reduce your principal ANY TIME without penalty.  We think paying down debt is a good investment for your company, particularly with alternative investments yielding so little.  So we do not charge any prepay penalty.  Instead, our credit union partners just keep your loan in portfolio instead of selling them to an investment bank.  We recycle your money and lend it out again as you prepay.  We think it’s good business.

Contact Tim Thomas at 303-746-9169 (tim.thomas@centennial-lending.com) for all the details.

REIS just released the vacancy, cap rate and pricing reports on Denver retail, office and multifamily for 3rd quarter.  Click here to download the PDF, data provided courtesy REIS Inc.

Retail:

REIS 3Q RETAIL REPT DEN

Office:

REIS 3Q OFFICE REPT DEN

Multifamily:

REIS 3Q 2011 APT REPT DEN

Rate and Program Summary Centennial Lending Commercial Mortgages January 2012 - Rates for 504 and commercial real estate loans

Success Stories by Centennial Lending - Click for somne examoples of recent closings

DENVER RETAIL, like the Nation’s malls,  is showing a gradual recovery.  Vacancy has descended slowly to about 8% overall with higher numbers in Aurora and the northwest corridor.  Asking rents are $18.64 in Boulder, showing 6.4% vacancy and $26.31 along the Colorado Blvd retail corridor which has only 1.6% vacancy.

REIS reports that nationally, the office vacancy rate fell in the fourth quarter of 2011 and rents rose for the fifth straight period, signaling that a recovery is well under way.

DENVER OFFICE rents are up slightly, to $19.74/SF asking rents versus $19.64 in third quarter.  Vacancy is 15.7% area wide.  The highest rents are (can you say oil and support industries?) downtown at $25.47/SF, then Northwest to Boulder at $21.39/SF, then in Cherry Creek at $21.18/SF.  We had net absorption last quarter of 235,000 SF on an inventory of 107 million SF in metro Denver

REIS said as well that the national apartment vacancy rate fell to 5.2 percent, the lowest since the end of 2001. It was 5.6 percent in the previous three months and 6.6 percent a year earlier. As we have already reported, the Denver multifamily market remains strong with rising rents and vacancy under 5.5%.

Building or buying industrial space?  Asking rents are $5.94/square foot overall, down a bit from $5.97 in 2010. The highest industrial rents are in Boulder, at $8.86, followed by Southeast Denver, at $8.27, followed by the northwest US 36 corridor at $8.27.  Really encouraging are the vacancy rates – 4.2% metro wide, 4.5% in Commerce City, and still tighter in Brighton and in the northeastern suburbs, with space virtually nonexistent due to the oil and natural gas boom.  The exception (but perhaps not for long) is Longmont metro, with a 16.9% vacancy due to new inventory coming online

But it’s not good ENOUGH.  As my good fried Lou Barnes pointed out this week, “ Interest rates rise on legitimate good news; today’s 10-year T-note yield has fallen to 1.94%, and mortgages are near 4.00% again. The stock market rises on good news, and today it is flat to down.

200,000 jobs is good news, but year-over-year earnings have risen only 2.1%. A few back to work, but not the job that it was. And even if employment growth persists at that level, and new unemployment claims stay down as they were in December from 400,000 weekly, it’s not enough to dent the job losses since 2007. “

We need to grow by 400,000 not 200,000 jobs a month to get out of this.  300,000 just keeps pace with in migration.

And the LABOR FORCE numbers are off. Unemployed people (the numerator) excludes the horribly UNDER employed, and EXCLUDES the disheartened who have left the workforce.

Part of the tepid response from markets today is derived from ongoing concern for Europe. Perhaps the best indicator for markets this winter will be the pace of recession onset in Europe.

But, here, genuine economic turn depends on housing.   Fed chairman Ben Bernanke  sent a very well done paper to Congress, laying out damage by insufficient credit, by pinched and self-destructive attitude at the regulators of Fannie and Freddie, and by exposing the total absence of administration policy.

www.federalreserve.gov/publications/other-reports/files/housing-white-paper-20120104.pdf.  On Friday,  Bill Dudley, President of the NY Fed fired off another blast at Congress and the President: www.newyorkfed.org/newsevents/speeches/2012/dud120106.html.

We have 4.2 million homes in terminal delinquency, not yet foreclosed, and another 600,000 REO. The annual rate of sale of existing homes is a little over 4 million, and one-third of that distressed resales.  The Nation has a long way to go to shake this recession.  We are not “there” yet.

We lend on gas stations (sparingly) , self storage, office, multifamily, retail and industrial properties. We also do the senior part of SBA 504 loans, which offer up to 90% combined LTV on owner-user buildings and office, retail and industrial condos.

Today let’s talk about the six county metro Office Market.  Then will look at industrial, Multifamily and retail.

The Metro Denver office market vacancy rate fell a bit from 13.8 percent in the second quarter of 2011 to 13.5 percent in the third quarter. Third quarter net absorption was positive and totaled 400,180 square feet, compared to positive net absorption of roughly 253,430 square feet in the second quarter. One building with a total of 30,070 square feet was delivered in the third quarter, and 907,060 square feet in nine buildings remained under construction.

Lones Llang Lasalle’s TJ Scnippits forecast and actual numbers:

2009                       Negative  900,000 SF

2010                       Positive 800,000 SF

2011                       YTD Positive 1,000,000 SF ESt

2012                       Positive 600,000 SF Forecast

2013                       Positive 1,50,000 SF Forecast

Are we energized yet?  2012 is going to be another year of positive absorption here driven by job growth.  And lenders like credit unions are very much back in the market!

For us, here in the US, just remember three numbers:  5.1 trillion is what we spend in a year, 3.6 trillion is what we take in,  so the gap 1.5 trillion is what we add to the debt pile.  A HUGE debt pile.  To be exact, $15.092 Trillion.  Makes you want to Occupy Congress.  And at the very least change the occupant at 1500 Pennsylvania Avenue.

The estimated population of the United States is 311,780,796 so each citizen’s share of this debt is $48,406.96. The National Debt has continued to increase an average of $3.99 billion per day since September 28, 2007!

So where do we get the $1.5 trillion? It comes out of thin air, we print the money which, in the not-so-long run, is inflationary.

Now,  European banks have tons of bad sovereign debt on their books.  The huge debt piles of the Greeks, the sonnets of the Portuguese, the paper of the Medici.

Value it at what it is really worth and the banks tier 1 capital (their net worth, so to speak,) disappears and the financial system collapses.

So one school (German) wants the European nations to exercise fiscal restraint, some day collect enough to pay their bills (what a concept).  Ain’t gonna happen, because the power rests with the socialists, (Everybody else in Europe) who want the ECB to print money, buy the bad debt and transfer the debt load via inflating prices with more paper chasing the same supply of goods and services, and debasing the Euro.

If that happens, our trading partners across the ocean will not have the money to buy US goods and services as before, so things get worse HERE. Contagion.

So be happy d0n’t worry. The U.S. unemployment rate fell to 8.6% in November, the lowest since March 2009. Non-farm jobs rose by 120,000, the Labor Department said. Private companies added 140,000 jobs, but the public sector dropped 20,000.  If the Euro-crisis were to catch on here, unemployment will rise again.  So we’re all hoping Europe prints the money.

My friend Lou Barnes writes this week, “The Treasury borrows and spends about $120 billion each month, and for that stimulus we get 120,000 jobs. Instead, why not just pay each of these people a million bucks and let them stay home? Europe is struggling with austerity, not us. Yet.

120 billion.  120 thousand jobs.  Ugh.  Happy Holidays!