I was recently laid off as part of 'round 2' where total of 5% of workforce was laid off from a US healthcare REIT (Canadian Team)
It's been a month and finding new opportunities have been difficult given the environment.
I have an upcoming interview with a small lending firm focused on land, construction, and bridge lending for condominiums.
While I do have background in lending working for MF assets and equity investments I don't have much experience when it comes to underwriting Condominiums.
Any advice what I should be looking for in terms of risks and mitigants for land, construction, and condo inventory sale bridge loans and what the best underwriting practices can look like?
Any advice is much appreciated.
Hi takeawalkk, just trying to help:
More suggestions...
Hope that helps.
Hey not as familiar, but from what I've heard developers (GPs) like to target 2x their money minimum. Generally when comparing condo vs rental, rental land is much cheaper on BSF basis. If in NYC rental can be say $200/SF where as condo might make sense if land is $400/SF.
Seems land and construction are similar for really most deals, for construction I'd assume they'd target a % sellout to hit certain level of proceeds and want a certain sellout by TCO. Very volatile sub asset class as it depends on where rates are and how the stock market is doing to produce buyers.
For sale price, there are usually always concessions paying taxes, common charges, or something like that. Quoted prices in news generally do not include concessions go see Extell, Macklowe and other big condo developers for concessions they're offering in this market to entice buyers (posts on Linkedin and their website).
For sellout targeting $/SF, all matters about quality and location. Things are run by a condo board and condo by laws/docs. Any other questions? Hope this helps.
Very helpful few points hoping you can comment on:
- Why do Condos $/SF > MF $/SF?
Not OP, but my guess is that condos are an emotional purchase, like any other SFH, and the valuation isn't tied to utility as much as rent is.
Why are condos on more expensive land? I think it's more if land is trading for higher prices rentals are not really feasible and thus only condos make sense at that point. I think it's the fact you can get $2k+/SF for condos in prime areas of Manhattan and rents for Class A in any borough are ranging from like $70-120/SF. I haven't modeled it out but if you have land that's 100k BSF to keep it easy that's $40 million for just land at $400 SF. Let's say all other costs are $600 SF so that's $100mm total to build 100k SF.
Even if you can build all 100k and get rent which you can't, at $100/SF which is for very nice quality and location that's $10mm of income. With a loss factor of 20% that's 80k or $8mm in income at 35% expenses on the high end that's $5.2mm NOI. A 5.2% YoC and if exit cap rates are 4.5% which may be tough that doesn't make sense & that's with very high rents in very few markets, larger assets, with amenities.
Just had my interview. It was with MD, AD, and Director so likely that was it.
I answered pretty well and highlighted my experience. In the end the MD had mentioned it’ll be a process given I’m the first interview (was referred by an employee). He also mentioned given I am actively looking to let them know if I hear back from someone else and ask for their decision. He also said that if I were fired a month later it would’ve been better.
Not sure what that meant usually I’d think if you like someone you present them with an offer. Any thoughts?
Quick question OP.
How do you explain being let go in interviews? We’re you the only one in team? Etc.
I imagine all these questions come up.
It was 5% of our work force.
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