Since inception in 1999, Goedecke & Co. has arranged in excess of $4.5 billion in real estate financing in the course of more than 450 transactions for more than 200 different clients with more than 100 different lenders and investors. Goedecke production during the recovery year of 2010 exceeded $410 million for 39 different clients in 63 transactions (one closing on an average of every 4 business days) involving 58 properties.

Virtually all Goedecke & Co. business is handled on an exclusive assignment basis. Repeat business is a hallmark; the company has a number of clients with whom ongoing relationships extend to more than 25 successful transactions.

Financings have included construction, interim and permanent loans, as well as institutional joint ventures, participating mortgages and private equity investments. Property types have included office, retail, industrial, apartments, condominiums, hotels, biotech (lab), self storage, golf courses and marinas. Sources of capital have included life insurance companies, banks, CMBS lenders, government sponsored agencies, pension fund advisors, opportunity funds and private investors.

2010

2010 turned out to be an initial recovery year for the real estate capital markets as investors anticipated the bottoming of the underlying commercial real estate markets. Many lenders were able to see opportunities among applicants seeking lower rate loans, structured responses to valuation issues, or financing for opportunistic acquisitions, whether of notes or properties.

Life companies began to reduce their mortgage loan spreads in 2010 in the face of dramatically lower corporate bond yields, implicitly lessening the liquidity premium they had imposed during the dark days of 2008 and 2009. CMBS lending began to trickle back. New England banks continued to compete aggressively for thoughtfully underwritten business, and individual and opportunity investors sought yield or gains or both among the numerous properties that had been overleveraged during the boom years. Goedecke & Co. accessed all of these investors during 2010 in order to meet clients’ financing needs.

Refinancing

• The long time owner of a Boston office building that was approximately 80% leased had a $3.6 million CMBS loan that was maturing. Goedecke & Co. was able to refinance the loan with a life insurance company for $4.4 million, with $625,000 going into a leasing reserve for vacancy and rollover.

• A New England based client had an $8.5 million CMBS loan maturity secured by a 607,000 sq.ft. Midwest industrial building. Goedecke was able to commit and close a new $8.7 million non-recourse loan from a bank to replace the existing financing.

• A client needed equity for a new project. Goedecke & Co. was able to refinance his $8.0 million loan secured by an industrial building for $9.0 million with his existing bank lender, decreasing the interest rate substantially over the remaining loan term and providing cash proceeds for investment in the new project.

• A client had an existing $16.3 million, recourse first mortgage loan maturing on an older shopping center located in a tertiary market. Goedecke & Co. was able to arrange a new, non-recourse CMBS loan for $16.1 million to refinance almost all of the loan balance.

Recapitalization

• A hotel owner for whom Goedecke & Co. had previously arranged $23.5 million in acquisition and renovation financing had the opportunity to buy out its first mortgage note (which had failed to securitize) for $17.5 million. Goedecke was able to put together $17.5 million in note purchase financing from three banks to accomplish the DPO.

• An apartment owner had the opportunity to refinance his $20+ million HUD 221 (d)(4) loan at 3.59% for 35 years but needed to pay off $4.3 million in secondary financing. Goedecke & Co. arranged $1.35 million in mezzanine financing from private investors to facilitate the DPO of the second mortgage at $1.5 million.

• A client had the opportunity to purchase his $7.99 million first mortgage loan (secured by a 230,000 sq.ft. industrial building) at a DPO of $4.15 million. Goedecke & Co. arranged a new $3.0 million first mortgage loan (with entity level rather than personal recourse) and a portion of the $2.0 million in preferred equity needed to complete the transaction.

Acquisitions

• A client had a buyer for his Asian supermarket at a price that he found attractive, but the buyer required 70%, ten year, non-recourse financing in order to close. The property was not attractive to life companies and banks wouldn’t do 70% financing without guarantees, so Goedecke & Co. arranged a $7.75 million financing that was reputed to be the first CMBS loan originated in New England since 2007. The loan successfully securitized and Goedecke & Co. is acting as sub-servicer.

• A client had the opportunity to buy back for $12.2 million an empty 650,000 sq.ft. industrial building from a corporate user to whom he had previously sold it for more than $40 million. Goedecke & Co. secured a $16.9 million loan for him from a bank that funded $9 million at closing.

• A client bought a 40% leased, 274,000 sq.ft. office/industrial complex for $10.3 million from a lender which had foreclosed. Goedecke secured a $16.2 million, non-recourse loan for him from a bank that funded $6.5 million at closing.

Construction

• A client had the ability to purchase a 37 unit apartment site in Cambridge but needed entitlements and construction financing. Goedecke & Co. secured a commitment in June for a $9 million loan which funded in December when the building permit issued.

• A client had a zoned site in downtown Hanover, New Hampshire for a 69 room boutique hotel. Goedecke secured construction and takeout financing for $8.6 million from two banks and the SBA.

• A client had built a 173,000 sq.ft. industrial facility in central Massachusetts for a regional beverage company, with a $6,500,00 loan from a major bank arranged by Goedecke. The tenant needed an additional 112,000 sq.ft. but the bank was retreating from commercial real estate. Goedecke secured a regional bank as a replacement lender, which took out the existing loan and advanced an additional $4,500,000 on a construction loan basis.

In 2011 as the market recovers further, Goedecke & Co. continues to find opportunities to help clients to refinance advantageously, recapitalize assets in transition, acquire assets that have become available, and build new projects selectively where relevant demand exists.

To date, permanent and construction/permanent first mortgage loans have made up 48% of consummated financings, followed by interim loans (21%) and construction loans (15%). Equity and equity related investments have also made up 16% of transaction volume.

$1.2 billion of the more than $4.5 billion of capital sourced from 1999-2010 has been from life insurance companies. Banks, in line with their status as the country's largest source of commercial mortgage capital, have provided $1.58 billion, or 33% of total financings. Pension funds and their advisors with $516 million and private sources with $273 million have provided most of the equity and structured finance capital. Life company financings have been predominantly permanent loans, while until 2008 bank financings were generally construction loans or interim loans on not yet stabilized properties. These had been, in most cases, with a lag of a year or two converted to permanent loans with life companies or CMBS originators.

Given the service-oriented nature of the New England economy, office buildings have traditionally been a major share of Goedecke business, representing 28% of the financings consummated. After 2006 retail projects nearly overtook office as the leading product type, with 26% of financings since inception. Industrial buildings, including R & D and lab properties, have constituted 19% of consummated financings, while multi-family properties, including both rental apartments and occasional condo projects, have been 12% of financings.