NEWS FRONT
Government Pushes Plan for Atlantic City Overhaul
ATLANTIC CITY—In late July, Gov. Chris
Christie unveiled the first specific details
of how Atlantic City’s casino and tourism
district may come under state control.
Standing on the 50-yard line at the new
Meadowlands Stadium, the governor held
up the finished report by his Advisory
Commission on Gaming, Sports and
Entertainment, which contains recom-
mendations on making the three indus-
tries solvent. Later that day, Christie,
flanked by Commission chairman Jon F.
Hanson outside of Boardwalk Hall here,
said it’s important for Atlantic City’s stake-
holders to move forward instead of “look-
ing back or assigning blame.”
His historic announcement aims to strip
away decades of regulation surrounding
the casinos, hoping to copy the gambling
rules in Nevada. One of Christie’s top pri-
orities is to use casino tax revenue to fund
Atlantic City’s blighted areas.
Local and state officials have naturally
focused most on the governor’s plan to
create a state-run portion of Atlantic City
in a plan described as “a city within a city.”
The governor said he doesn’t expect
the proposed changes to alter the tax
structure for Atlantic City’s casinos. At this
point, casino companies would not face
any new taxation, but he said that the
Atlantic City Tourism District would oper-
ate in a public-private partnership and
gaming firms and future investors would
be expected to provide significant funds
for the partnership. This means that the
state will operate services within the dis-
trict, but casinos would also help fund
those services.
Executive Moves
PHILADELPHIA—NorthMarq
has added an investment sales team to its
office here. Joe Verdejo
and Jim Sheehan have
joined the firm as
senior vice presidents,
with Valerie Falco serving as the team’s client
coordinator.
TEANECK, NJ—Alex
Previdi has been
named vice president
at the local ly based
office of Cassidy Turley.
Previously, he was a
vice president with
Jones Lang LaSalle.
For more executive moves, please visit
www.globest.com/executivewatch.
Sheehan
Verdejo
Garden State Prime Spot for Smart Multifamily Money
With interest rates near all-time lows, many multifamily developers in New Jersey are looking at upcoming maturities over the
next 12, 24 and even 36 months. Meanwhile, rates on five-year
multifamily loans are running close to 4%, with 10-year loans
below 5%. This has led many owners to review the prepayment
language in their mortgage notes and pay off
where they can with few prepayment penalties. Even with significant yield maintenance
or defeasance prepayments staring them in
the face, many borrowers are biting the bullet, paying off loans with
a sizable penalty and locking in today’s low
rates on refinancings.
Still, many uncertainties lie ahead, including interest rates and the future of both the economy and government sponsored entities Fannie Mae, Freddie Mac and HUD,
which provided over 90% of all multifamily financing in the US in
2008 and 2009. Lawmakers in Washington have been discussing
for months the future on the GSEs. But there are two edges to the
sword: if the economy slows further, rates may decline even more.
Conversely, if lawmakers reduce the availability of financing from
By Mark Scott
the GSEs or, even better, the economy perks up, rates may rise.
Looking ahead, paying a prepayment penalty or locking the
loan rate for a future closing in three, six or nine months is
appealing in light of low rates. The cost of locking forward under
six months ranges from four to six basis points in the rates of the
loan. With a rate of 5% or better on a 10-year multifamily loan, a
borrower may want to lock forward three to six months.
Of late, the life companies have also returned, seeking to
finance quality multifamily product. In particular, they are looking for stability in financing and the ability not only to compete
on rate, but also to capture pre-stabilized properties not yet ready
for GSE financing. In the past couple of months, for instance, our
firm has locked in more than $100 million with life insurance
lenders. These companies are trying to rebalance their portfolios
with high quality or low loan-to-value multifamily loans and fend
off prepayments and amortization run off. In short, in New Jersey,
which houses a growing number of properties, it is a good time to
be a multifamily borrower.
Mark Scott is president of Commercial Mortgage Capital in Livingston,
NJ. He may be contacted at mscott@newcommercialmortgage.com. The
views expressed here are the author’s own.
