Friday, January 29, 2016

The Chart Explaining Fed Rate Policy: Wages, The Real Reason why Fed Raises Rates


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Thursday, January 14, 2016

Can Maturing CMBS Loans Wipe Out Your Equity and Wealth?

The large volume of maturing CMBS loans combined with new regulatory hurdles and widening spreads will have big impacts on the market in the coming year.

The wave of CMBS maturing loans that were created at the height of the real estate bubble will crest in 2016 and 2017. According to estimates by Trepp, nearly 20% of these maturing commercial mortgages will demand additional capital from current borrowers or new buyers when the loan is refinanced or the property is sold.

How Does the CMBS Market Work?

New risk retention rules coming into play in 2016 require that either the originating lender will have to hold a certain piece of the loan for at least 5 years and/or the B-piece buyer will have to hold the paper for that amount of time. As B-piece buyers aren't set up to comply with these regulations, they will be forced to create processes to handle, which will result in increased cost passed on to the borrower in the form of higher spreads.

Meanwhile, CMBS spreads are drifting wider with a recent 10-year AAA bond clearing at 140 basis points over swaps. This ongoing weakness has led some issuers scheduled to price this year to push off their deals until later in 2016.

CMBS Swap Spreads



What are the possible solutions for you?

Non-Bank Balance Sheet Lenders
Since 2008 a sizable contingent of non-bank balance sheet lenders have sprung up and they unencumbered by banking regulations, legal lending limits, or geographical footprint. They keep all loans in-house and rarely outsource underwriting or servicing to third parties. Permanent loans offered by non-bank lenders provide long-term financing for stabilized commercial real estate, with loan terms up to 20 years and without the hurdles of defeasance. Bridge loans by same lender are designed for un-stabilized properties or shorter term business plans and include leading-edge features such as additional future facilities for lease-up costs and loan terms up to 7 years. Most non-bank lenders make non-recourse loans 

Non-Real Estate Collateralized Lenders
Perhaps one of the oldest lending communities, non-real estate collateralized lenders offer flexible loans secured by a myriad of assets, including securities, business and real estate equity, etc. The closing processes are simplified and with lower costs. Financing may be used in combination with real estate backed loans.

To prepare for the coming wave please contact Redmount Capital Partners or learn more about our capabilities.
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Clicking the Like button on various social media platforms, such as LinkedIn, Facebook, etc. does not constitute a testimonial for or endorsement of Redmount Capital Partners LLC or any Investment Advisor Representative. “Like” is not meant in the traditional sense. Posts must refrain from recommending investment advisory services or providing testimonials for our firm, since they are strictly prohibited. Please understand that we are required to delete such posts, since this is a regulatory requirement.


Tuesday, January 5, 2016

Regularly Updated Estate Plans are Essential for Family Business Owners

The principal creators of wealth are family business owners. Family businesses contribute over 70 percent of global production. Estate planning plays a vital role in the perpetuation of a family business. Considering the rapid change in business dynamics, estate planning is essential these days.

The majority of family business owners don’t update their estate plan. Over 50 percent of family business owners don’t review their estate plan for over five years.

An estate plan becomes old or outdated after a few years. Adding to this, circumstances in families and relations among family members, business matters, net worth, etc., tend to change irregularly or over a period of time. This is when estate planning comes into the picture.

It doesn't matter how complex an estate plan is. It's better to get a customized estate plan as long as one's legally competent. It will also ensure safe passage of family business from one generation to another without any dispute that may further damage the prospects of growth.

When kept up-to-date, estate planning is also useful in offloading family business for a fair price. Understanding the business management philosophy is essential when preparing an estate plan, and more particularly, when the business transition is taking place.

Several academic institutions are offering courses on estate planning. For instance, American Law Institute is offering estate planning course CLE for those who represent family business owners. It provides right from estate administration, updates on transfer planning, current income tax, trust advisors, trust protectors, dealing with intra-family rivalries in succession planning, etc.

Academics and legal experts find that many family business owners lack awareness about even charitable planning and charitable gifts. Over 50 percent of family business owners are not exploring the options involved in tax benefits.

Some family business owners do not take advantage of several options available to avoid estate tax, gift tax and other taxes, legally. This happens out of ignorance or negligence. Hence, it's wise to review and refine existing estate plans.

Many family business owners realize that they're richer than when their estate plan was drawn up. Family business owners, depending upon their state and federal laws, can have updated estate planning not only enhance value, but add protection as well.

Estate planning is essential for inheritance. It helps heirs retain control of assets and minimizes tax imposed by the State and Federal government.

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Clicking the Like button on various social media platforms, such as LinkedIn, Facebook, etc. does not constitute a testimonial for or endorsement of Redmount Capital Partners LLC or any Investment Advisor Representative. “Like” is not meant in the traditional sense. Posts must refrain from recommending investment advisory services or providing testimonials for our firm, since they are strictly prohibited. Please understand that we are required to delete such posts, since this is a regulatory requirement.