Marcus & Millichap Sees Opportunity in Helping Beleaguered Borrowers

Debt might be weighing down the commercial real estate business, but that doesn't mean there isn't opportunity posed by the problem.

Dees Stribling, Contributing Editor

New York–Debt might be weighing down the commercial real estate business, but that doesn’t mean there isn’t opportunity posed by the problem. At least that’s the outlook of Marcus & Millichap Capital Corp. (MMCC), which has launched a new division to assist borrowers with loan modifications and restructurings, loan maturity extensions, loan assumptions, discounted pay-offs and note purchases.

MMCC is calling the new entity its Debt Advisory Services (DAS) division. William E. Hughes, senior vice president and managing director of MMCC, is head of the new division. The demand for debt-related services, Hughes tells MHN, is immediate and probably will be strong for a number of years.

The latest numbers from the Mortgage Bankers Association certainly bear him out, both in the broader commercial real estate market as well as among multifamily loans. According to the MBA, the 60+ day delinquency rate on multifamily loans held or insured by Fannie Mae spiked upward 11 basis points between 2Q09 and 3Q09 to 0.62 percent, with 90+ day delinquencies at 0.11 percent during the third quarter. Delinquency rates for the fourth quarter of 2009 won’t be published until next month, but there’s little reason to believe that they are headed anywhere but up.

“Many of the services offered by DAS will be in demand over the next two to three years,” Hughes says. “With that said, we also believe the need for services will morph over the next couple of years. Marcus & Millichap has always done well adjusting to market need, particularly in times of stress, and this is also the case for DAS, now and in the near future.”

As a borrower’s representative, DAS will act as a single point of contact between a buyer and seller in working with a loan servicer or other approval parties. DAS also plans to leverage its relationship with Marcus & Millichap Real Estate Investment Services and its network of investment specialists to assist in its efforts.

Private and institutional borrowers of all stripes will be DAS clients, notes Hughes, including those associated with multifamily properties. “As far as multifamily product goes, DAS is working with borrowers and lenders alike to find mutually acceptable solutions to maturing loans and stressed assets,” he says.

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