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2019 Start-of-the-Year Update

2019 Start-of-the-Year Update

Medalist Capital had a record-breaking year in 2018. A big thank you to all our loyal clients, lenders, and associates who helped make it happen! Take a look at our 2019 Start-of-the-Year Update to see some of our achievements this past year. 

3Q Newsletter - 2018

3Q Newsletter - 2018

Now that the summer and its heat has passed, I hope everyone is excited about the cooler fall temperatures but can also look back on some memorable summer adventures.  Obviously, the big event this past quarter for those of us in North Carolina was Hurricane Florence.  Although the storm delivered a serious blow to the eastern region of our state, the strength and resiliency of our community has been remarkable.  Also notable is the overwhelming desire of so many people not directly affected by Florence to help our eastern neighbors, either financially or by volunteering their time for cleanup efforts.  We Carolinians are a tough bunch, and we are making that evident right now!  Please continue to keep those affected in your thoughts and prayers.

Now that the summer and its heat has passed, I hope everyone is excited about the cooler fall temperatures but can also look back on some memorable summer adventures.  Obviously, the big event this past quarter for those of us in North Carolina was Hurricane Florence.  Although the storm delivered a serious blow to the eastern region of our state, the strength and resiliency of our community has been remarkable.  Also notable is the overwhelming desire of so many people not directly affected by Florence to help our eastern neighbors, either financially or by volunteering their time for cleanup efforts.  We Carolinians are a tough bunch, and we are making that evident right now!  Please continue to keep those affected in your thoughts and prayers.    
 
Medalist Capital had a productive 3rd quarter, closing 20 loans with a total volume of approximately $193 million.  Retail accounted for 40% of our 3rd quarter volume, followed by office (25%), multi-family and industrial (15% each), and self-storage (5%).  Loan sizes ranged from $1.5 million up to $21 million with an average of $10.2 million.  For the remainder of 2018, our pipeline is very robust, and October is shaping up to be our most active month of the year.  Year-to-date we are on par with 2017.  With the strong 4th quarter pipeline, we expect 2018 to be one of our best years-to-date, closing over $1.1 billion.  We are incredibly thankful for our clients and capital sources that have helped us reach this level. 
 
In preparing for this newsletter, I surveyed a handful of our life insurance companies for an update on their year-to-date production versus allocation and predictions for 2019.  There was a wide range of responses – a few are behind on their 2018 allocation and are getting aggressive while playing catch up.  Most are on pace, continuing to lend through year-end, and a small handful are ahead of schedule and “tapping the brakes” for the remainder of the year.  A common theme for 2019 was the expectation of higher allocations for commercial mortgages given their relative value, but with a concern over the volume of quality deals to compete on.  For our borrowers this is good news, as it appears competition among life companies will be fierce for quality deals in 2019.
 
Treasury yields ended the quarter higher after a fairly quiet start.  The 10-year Yield began the quarter at 2.87% and stayed in the 2.80% - 2.90% range much of July, until the end of the month when it rose to 2.96%.  That was the high mark for August and the first half of September, until 9/11 when it hit 2.98% and a peak of 3.10% on 9/25.  It closed out the quarter at 3.05%, compared to 2.46% at the start of 2018 and 2.33% at the end of 3rd quarter 2017.  As of the date of this writing, strong economic data released at the start of October shot the 10-year up to 3.19%.  Despite the rising yield environment, coupon rates are still attractive as spread compression is prevalent given the intense competition among many lenders to close out the year strong.
 
Medalist Capital continues to have the broadest sources of debt and equity capital in the Southeast, and we appreciate the trust many of you have put in us to assist you with your financing needs this year.  We are eager and ready to be a part of your team for any debt or equity needs you have as we close out 2018 and head into 2019.  Please let us know how we can help and let’s all finish out the year strong!

Best regards,

Scott Mauzy

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2Q Newsletter - 2018

2Q Newsletter - 2018

Summer is here!  Despite a cooler spring that seemed to linger much longer than usual, we certainly have jumped head first into the “dog days” of summer.  Despite the recent heat wave that swept across much of the country (and certainly hit us here in the Southeast), we hope that everyone had a safe and fun-filled Fourth of July.  Hopefully, you found a cool breeze while celebrating our country’s Independence in the presence of family and friends.  With the 4th falling midweek this year, we certainly felt a pause before and after the holiday.  It seems that both our clients and lenders are now back in the saddle and ready to continue what has already been an active 2018.

Summer is here!  Despite a cooler spring that seemed to linger much longer than usual, we certainly have jumped head first into the “dog days” of summer.  Despite the recent heat wave that swept across much of the country (and certainly hit us here in the Southeast), we hope that everyone had a safe and fun-filled Fourth of July.  Hopefully, you found a cool breeze while celebrating our country’s Independence in the presence of family and friends.  With the 4th falling midweek this year, we certainly felt a pause before and after the holiday.  It seems that both our clients and lenders are now back in the saddle and ready to continue what has already been an active 2018.

We had a very productive 2nd quarter at Medalist Capital and the result was a record first half of the year for our firm.  To date, we have placed over $650 million in mortgages in 2018 with a strong pipeline of transactions slated for both the 3rd and 4th quarters.  Our 2nd quarter transactions ranged in size from $1 million to $30 million and represented all major asset classes. We worked with 13 different capital sources in the 2nd quarter including life insurance companies, banks, credit tenant lenders (CTL), CMBS, agencies, and bridge lenders.  Deals ranged from ground-up construction loans to interim bridge facilities to permanent fixed-rate mortgages. As always, our correspondent life companies provided the bulk of this capital.  Our life companies continue to be aggressive and their collective appetite for moderately leveraged, quality real estate assets is as high as we have seen in this cycle.  We expect that to continue through the remainder of 2018.

While the 1st quarter was characterized by a steady climb in Treasury rates, the 2nd quarter was a bit of an interest rate rollercoaster ride.  The 10-Year Treasury started the quarter at 2.73%, peaked at 3.11% in mid-May, and has now settled back at 2.85% (which is lower than it was in mid-February).  While there are certainly concerns about the flattening of the yield curve (currently at its flattest level since 2007), we have seen borrowers take advantage of this abnormality to lock in long-term mortgages at very small interest rate premiums relative to shorter loan terms.  While our permanent lenders have capacity for both short-term deals (3 years), long-term deals (30 years or more) and everything in between, we have seen many borrowers take this opportunity to lock many deals in the 20+ year term range.

While we are all hearing more about the potential negative impact of trade policy, the negative indications of a flat yield curve, geopolitical risk, GDP growth concerns, etc., our real estate markets are performing well and Medalist Capital’s debt and equity capital sources continue to be active and aggressive for quality real estate transactions.  We at Medalist Capital are active in all segments of the market and have the deepest sources of capital in the Southeast.  We appreciate the business that we have done with many of you so far in 2018 and look forward to a prosperous second half of the year.  Please keep us in mind as you have financing questions or needs and we hope that you have a fantastic summer!

Best Regards,

Bryan Brooks

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1Q Newsletter - 2018

1Q Newsletter - 2018

Despite the extended winter weather during the first quarter of 2018, business activity has been boiling at Medalist Capital, where we achieved record volume with 34 deals totaling $497 million! The current pipeline is also very robust and we want to thank our loyal clients and capital sources whose efforts also helped us surpass $10 Billion in loan volume since the inception of Medalist Capital in 2004!

Despite the extended winter weather during the first quarter of 2018, business activity has been boiling at Medalist Capital, where we achieved record volume with 34 deals totaling $497 million! The current pipeline is also very robust and we want to thank our loyal clients and capital sources whose efforts also helped us surpass $10 Billion in loan volume since the inception of Medalist Capital in 2004!
 
As treasury yields have increased, we have seen a tightening in spreads that helped keep the low end of the coupon range around 4%.  One take away from our MBA conference in February was the general theme that low mortgage origination volume from 2008 will translate to fewer loan opportunities in 2018 and create intense competition among lenders to deploy capital. We are seeing that competition play out already particularly at the lower leverage points.
 
Libor is currently 1.89%, and the 10-year treasury yield is 2.82%.  The Fed raised rates in March 25 basis points at their first meeting with Jerome Powell as Chairman.  The fed target rate is currently 1.50-1.75%, and they currently anticipate 2-3 more hikes in 2018 with futures showing the odds of a June hike at about 88%.  Even with the improved outlook, the fed minutes published recently showed concern among fed officials that certain headwinds like trade tariffs and recent turbulence in financial markets highlight risks to growth.
 
The renewed anticipation for rising interest rates over the last several months has spurred an increase in the number of early payoff requests from borrowers.  In many instances we are analyzing the potential benefits of refinancing loans prior to maturity, even when there may be a prepayment fee, in order to capture the interest savings from locking in today’s interest rate versus waiting and potentially ending up with a higher rate in the future.  We are running this feasibility analysis in conjunction with our affiliate company, Medalist Defeasance, who many clients have used for the prepayment services of CMBS loans.  Please put us to work if you have loans maturing in the next 18 months and are interested in this analysis.  Many lenders will forward rate lock as far as 12 months, and some can even lock at par with 4 to 6 months which drastically improves the interest savings analysis.
 
We look forward to continuing to build on the momentum from the first quarter, and we hope that the spring weather pattern we are finally seeing in our markets, hits everyone’s radar soon.
 
Best Regards,

Roger Montague

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2018 Start-of-Year Update

2018 Start-of-Year Update

Medalist Capital had an outstanding year in 2017. A big thank you to our loyal clients, lenders, and associates who helped make it happen! Take a look at our 2018 Start-of-the-Year Update to see some of our achievements this past year. 

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Medalist Capital Arranges $71 Million in Financing for Gramercy and Solis Ninth Projects

Medalist Capital Arranges $71 Million in Financing for Gramercy and Solis Ninth Projects

Medalist Capital recently arranged life insurance company financing for The Gramercy in Raleigh, North Carolina and Solis Ninth in Durham, North Carolina. Both deals were led by Howard Brooks, Principal, in Medalist’s Raleigh office.

Medalist Capital recently arranged life insurance company financing for The Gramercy in Raleigh, North Carolina and Solis Ninth in Durham, North Carolina. Both deals were led by Howard Brooks, Principal, in Medalist’s Raleigh office.

The Gramercy is an apartment complex encompassing 203 units and 7,500 square feet of ground floor retail located in the heart of downtown Raleigh. Solis Ninth is a six-story, mid-rise apartment building encompassing 229 units and is in downtown Durham two blocks from Duke University.

Medalist Capital Arranges $100 Million Debt Placement for The Pinnacle at Symphony Place in Nashville

Medalist Capital Arranges $100 Million Debt Placement for The Pinnacle at Symphony Place in Nashville

Medalist Capital recently arranged financing for The Pinnacle at Symphony Place in Nashville on behalf of Highwoods Properties. The debt placement team was led by Bat Barber, Principal, in Medalist’s Raleigh, NC office with one of their correspondent lenders, Allianz Real Estate, who was the sole lender on the $100 million financing.

Medalist Capital recently arranged financing for The Pinnacle at Symphony Place in Nashville on behalf of Highwoods Properties. The debt placement team was led by Bat Barber, Principal, in Medalist’s Raleigh, NC office with one of their correspondent lenders, Allianz Real Estate, who was the sole lender on the $100 million financing.

 The loan is secured by a Class A LEED Gold certified office property in the heart of downtown Nashville. The Pinnacle at Symphony Place, built in 2010, is a 28-story tower encompassing 520,000 square feet, which sits atop a 10-level parking garage with 987 spaces. The property is 99% occupied by 20 tenants.

Recently, Nashville has experienced well noted economic success due to its highly educated workforce and low cost of doing business. Companies are expanding in and new ones are relocating to Nashville, and total employment is on the rise.

About Medalist Capital

Medalist Capital, Inc. is a commercial real estate financial services firm offering Mortgage Banking, Investment Advisory, and Defeasance services to our clients.  Since our inception in 2004, we have successfully completed over $8.9 billion in transaction volume and have offices in Charlotte, Raleigh, Charleston, and Atlanta.

About Highwoods Properties

Highwoods Properties, headquartered in Raleigh, NC, is a publicly traded (NYSE:HIW) real estate investment trust (“REIT”) and a member of the S&P MidCap 400 Index. The company is a fully integrated office REIT that owns, develops, acquires, leases and manages properties primarily in the best business districts (BBDs) of Atlanta, Greensboro, Memphis, Nashville, Orlando, Pittsburgh, Raleigh, Richmond and Tampa.

About Allianz Real Estate

Allianz Real Estate develops and executes worldwide tailored portfolio and investment strategies on behalf of the Allianz companies, considering direct as well as indirect investments and real estate loans. The operational management of investments and assets is currently performed in 7 international subsidiaries and hubs in Germany, France, Switzerland, Italy, Spain/Portugal, USA and Asia/Pacific. The headquarters of Allianz Real Estate are located in Munich and Paris. In the US, Allianz Real Estate holds a loan portfolio of over $10.7 billion.