A commercial real estate specialty finance company which is focused on originating and acquiring whole loans, bridge loans, subordinate interests in whole loans, commercial mortgage-backed securities and mezzanine loans.
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CBRE Realty Finance (CBF) is a mortgage real estate investment trust (REIT). The company’s business primarily focuses on originating, acquiring, investing, financing and managing a diversified portfolio of commercial real estate-related loans and securities.
The United States commercial real estate industry has witnessed lucrative property-level returns, as a result of which it attracted a huge amount of investment capital. Moreover, the decline in default rates on commercial mortgages nationally has spurred of the demand for commercial real estate loans, this is clearly reflected from the fact that total Commercial Mortgage-Backed Securities issuance has been increased by 11.8% for fiscal 2006. With improving occupancy levels, rising rental rates in commercial real estate combined with Federal Reserve’s decision to leave the interest rates unchanged at 5.25% will have a positive impact on mortgage REITs earnings in 2007.
For the fiscal 2006, the company originated $1.04 billion of new investments of which 63% were sourced through its affiliated CBRE/Melody network. The company debt investments generated income of $64.6 million. It’s total investment portfolio shoot up to $1.37 billion for fiscal 2006, when compared to $538.1 million last year. The company’s loan portfolio has a weighted average maturity of 3.4 years and a weighted average loan-to-value ratio of 69%, much below the industry standard of 80%.
A stable interest rate scenario should enable the company to achieve its fiscal 2007 adjusted funds from operations (AFFO) guidance of around $1.10-$1.20 per share, an increase of at least 20.9% when compared to fiscal 2006. These positive aspects should make investing in CBRE a worthwhile option.