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Publications

Latest Publications | Archived Publications
  • New Interagency Appraisal and Evaluation Guidelines. Brief Review and SmallBalance.com Product Compliance.. Boxwood Means, Inc. June 2011.
  • Fuchs, Randy and Michaell Taylor. "Not One-Size-Fits-All." Mortgage Banking. April 2011. [View-only copy]
  • Researching the Right Stuff: Guiding Principles for Analyzing Small Commercial Properties. Boxwood Means, Inc. November, 2010.
  • Bent but Not Broken: Small-Cap CRE Prices Prove Resilient.. Boxwood Means Research. August 2010.
  • Small Commercial Mortgage Market Shows Signs of Life. Boxwood Means Research Study. December 2008.
  • Navigating Through Troubled Waters. Boxwood presentation at the WesCorp's Annual Credit Union Outlook conference. September 23, 2008.
  • Market Overview (2/08). Boxwood presentation at the Mortgage Bankers Association CREF Conference. February 5, 2008.
  • Market Downshift (12/07). Boxwood presentation at the Mortgage Brokers Forum on Small-Balance Commercial Real Estate Lending, December 4, 2007.
  • Steady As She Goes: Small-Balance Market Update. Survey of Small-Balance Lenders - Spring 2007 (06/07). Sponsored by Boxwood Means and Scotsman Guide; written by Boxwood Means.
  • Small is the New Big (04/07). Boxwood presentation at the Mortgage Brokers Forum on Small-Balance Commercial Real Estate Lending, April 25, 2007.
  • Everyone Can Play. Anyone Can Win. Small-Balance Commercial Mortgage Trends(02/07). Boxwood presentation at the Mortgage Bankers Association CREF Conference, February 6, 2007.
  • Market in Transition:2006 Small-Balance Commercial Mortgage Lenders Survey(11/06). Sponsored by Boxwood Means and Scotsman Guide; written by Boxwood Means. The full report is available for purchase on the Scotsman Guide website. (http://www.scotsmanguide.com).
  • Lender Research Report Released (11/06) Boxwood and Scotsman Guide have published a new research report on small-balance commercial mortgage lenders. The small-balance loan market is in a transitional phase represented by growth and diversification according to the new research report, Market in Transition: 2006 Small-Balance Commercial Mortgage Lenders Survey. The second of two research reports produced through a partnership between Boxwood Means and Scotsman Guide, the study cites that lenders have formed dedicated small-loan programs and are investing in new products and services in order to offset the market's fragmentation and perceived increases in competition in this $130 billion marketplace.

    Some of the highlights of the report include:

    • Channel Competition is Heavy . Lenders rely on mortgage brokers and intermediaries for the vast majority of their originations.
    • Market Fragmentation is a Major Impediment . Lenders view the market's fragmentation as the No.1 challenge to the growth and health of the marketplace.
    • Alternative Underwriting Threatens the Status Quo . Though conventional, cash-flow underwriting practices prevail, a substantial percentage of lenders report using light and "no doc" approaches.
    • Securitization Makes In-roads . Securitization is a mainstay for a plurality of lenders. Many more lenders cite an interest in this exit strategy.

    Additional background material and options for purchasing the report are available on the Scotsman Guide web site, www.scotsmanguide.com This lender report complements the separate research study released earlier this month by Boxwood Means and Scotsman Guide involving the small-balance mortgage broker channel..

  • Navigating the Wholesale Channel:2006 Small-Balance Commercial Mortgage Brokers Survey(11/06) . Sponsored by Boxwood Means and Scotsman Guide; written by Boxwood Means. The full report is available for purchase on the Scotsman Guide website. (http://www.scotsmanguide.com).
  • Boxwood and Scotsman Guide have published primary research on broker intermediaries in the small-balance market. The report, “Navigating the Wholesale Channel: 2006 Small-Balance Commercial Mortgage Brokers Survey” sheds new light on the competitive wholesale channel and the brokers that originate the lion’s share of loans in the space.

    Small-balance market research specialists, Boxwood Means, Inc., partnered with Scotsman Guide in this ground-breaking research report that is based on a survey of 260 commercial and residential brokers conducted this past summer. The report uncovers for the first time how mortgage brokers are faring in this $134 billion lending space, the performance of residential brokers to date in migrating over to commercial deals and the important features and products that mortgage brokers seek from lenders.

    Some general highlights of the report include:

    • Residential brokers are successfully crossing over into the small-balance commercial arena as a result of the downdraft in the residential housing market. The wholesale channel is now composed of a larger and much more diverse population of loan brokers, with differing levels of sophistication, as well as needs and wants from lenders.
    • Brokers have difficulty finding lenders that satisfy their customer’s financing needs . The challenging attributes of the small commercial property inventory are a major reason that brokers work with so many lenders.
    • Optimism reigns in the wholesale channel , and residential and commercial brokers report that their deal volume has increased this year versus last. But brokers acknowledge that competition in the space is increasing.

    Additional background material and options for purchasing the report are available on the Scotsman Guide web site, www.scotsmanguide.com A complementary and separate research report on commercial lenders of small-balance mortgages is scheduled to be available to the public later this month.

  • Office Markets Break Away. Public webcast by Randy Fuchs on commercial real estate trends and forecasts,sponsored by Coldwell Banker Commercial. PDF version (6/06).
  • Last Year Saw $118Bln of Small-Balance Commercial Loan Originations (05/05/06)
  • Last year, some $118 billion of small commercial mortgages were originated, according to Boxwood Means Inc.

    That's an increase of roughly 11 percent from 2004, according to the Stamford, Conn., research firm. In terms of number of loans, some 180,000 were originated, up 4 percent from the year before.

    Small loans are loosely defined as having balances of $5 million or less. The average loan, according to Boxwood, is $708,000. That's up 8 percent from a year ago.

    Much of the increase in volumes is due to an increase of 6 percent, to $138 billion, in property sales volumes.

    "Obviously, we've had healthy market conditions," said Randy Fuchs, a principal and co-founder of Boxwood. "In addition, we're starting to see more lenders focusing on this space."

    So not only is borrower demand stronger as a result of the increase in property sales volume, but supply is heftier as well.

    But the business remains extremely fragmented. The biggest player is Washington Mutual, which held a 4 percent share of the market. Wells Fargo, Bank of America and Wachovia Bank each held 2 percent shares. Seller financing comprises the largest share of the market, with some 5 percent of all small-balance loans being provided by property sellers.

    Small-balance loans get securitized, but relatively infrequently when compared to larger conduit-style loans. Their massive volume - on a par with conduit loans - indicates a ripe opportunity.

    By nature, small loans aren't neatly homogeneous like conduit loans, and underwriting is highly specialized by lenders. But an increasing number of lenders, especially those with large residential mortgage origination networks, have begun exploiting the potential opportunities.

    Comments? E-mail Orest Mandzy or call him at (215) 504-2860, Ext. 211.

    Copyright © 2006 Commercial Real Estate Direct. All rights reserved. www.crenews.com

  • Two Thumbs Up!: Recovery in the Property Markets . Public webcast by Randy Fuchs on commercial real estate trends and forecasts, sponsored by Coldwell Banker Commercial. PDF version (3/06).
  • Fuchs, Randy, Michaell Taylor and S. Lewis Hill. Sizing Up the Small-Loan Market. Mortgage Banking. January 2006. Volume 66. No. 4, pps. 60-65.
  • Momentum Shift: Property Markets in Higher Gear. Public webcast by Randy Fuchs on commercial real estate trends and forecasts, sponsored by Coldwell Banker Commercial. PDF version (11/05).
  • Volume of Small-Balance Mortgages Grew to $30.1Bln in 1st Qtr (10/24/05)
  • Lenders originated $30.1 billion of small commercial mortgages - those smaller than $5 million apiece, according to a first-of-its kind study by Boxwood Means Inc.

    That marked the fourth consecutive quarter during which lenders originated more than $30 billion of small loans. In the first quarter of 2004, lenders originated $28.2 billion.

    Boxwood Means, a Stamford, Conn., research company, teamed with First American Commercial Real Estate Services, a Santa Ana, Calif., title company that has accumulated a massive database on commercial mortgage transactions and properties. Boxwood has been scrubbing the data, developing forecasting tools and analysis. Among the fruits of its labors is what could be the first comprehensive study of small-balance loans.

    The company's analysis indicates that the market for small-balance loans is on par with the CMBS market. Yet small-balance loans are only infrequently securitized on their own. That, according to Randy Fuchs, a principal of Boxwood, means the market is full of opportunity. But because of its nature - small loans aren't neatly homogeneous like conduit loans are and underwriting is very customized by lenders - the opportunities will be challenging to exploit.

    Some lenders often sprinkle small-balance loans in with their regular conduit fare into CMBS deals. But few have issued deals solely backed by small loans.

    Things might be changing though. Cheslock Bakker & Associates of Stamford, Conn., last year formed a venture that would originate small commercial mortgages through a group of residential originators, then sell the loans through securitizations. And there's talk that others, specifically conduit lenders, are kicking the market's tires as the conventional conduit business becomes more and more competitive. Because of the loans' general complexities, loan spreads are usually greater than those offered for the typically larger, commercial mortgages.

    Among the most active lenders during the first quarter were Washington Mutual, Bank of America, Wachovia Bank and JPMorgan Chase. However, not one lender garnered greater than a 4 percent share of the market, according to Boxwood Means' research.

    The thinking is that players who are able to lend efficiency to the business should profit handsomely, just like the early players in the CMBS market did.

    "This market is very inefficient," Fuchs explained. "No lender has real market share. Information costs are high. And loans aren't big enough to justify the costs to figure them out." Still, he noted, "a lot of folks are looking to get into the business," many by marrying technologies developed for the residential and commercial mortgage markets.

    Besides conduit lenders, residential lenders are also eyeing the market. Their thinking is that many of their residential borrower clients also own small commercial properties that need to be financed.Of the volume originated in the first quarter, 29 percent was backed by apartment properties and 27 percent was backed by commercial properties, generally meaning offices.

    Boxwood Means says the market for small-loans continues growing at a healthy clip, estimating that the second quarter probably saw up to $34 billion of originations. Meanwhile, average loan size has grown 8 percent to $690,000 during the first quarter.

    Comments? E-mail Orest Mandzy or call him at (215) 504-2860, Ext. 211.

    Copyright © 2005 Commercial Real Estate Direct. All rights reserved. www.crenews.com

  • Taylor, Michaell and Randy Fuchs. "Diversification Benefits from Geographical Dispersion in Multifamily Portfolios." The RMA Journal. September 2005, pps 62-67.
  • Terra Firma: A Foothold for Commercial Real Estate. Public webcast presentation by Randy Fuchs on commercial real estate market trends and forecasts, sponsored by Coldwell Banker Commercial. PDF version (8/05).
  • Consulting Firm Plans Launch of REIT Hedge Fund (2/14/04)
  • Two research executives are planning to launch a hedge fund that would invest solely in REITs.

    The two, Randy Fuchs and Michaell Taylor, have been providing a variety of consulting services to real estate companies, such as portfolio analytics and marketing research, through their company, Boxwood Means Inc. of Harrison, N.Y. They're now ready to delve into the hedge-fund business.

    REIT stocks have benefited recently largely because of the massive amount of capital chasing yield. And while there are some investment funds that focus solely on REITs, most rely on fundamental research to determine which companies to buy or sell. Boxwood Means, which uses fundamental analysis to evaluate the properties owned by REITs, takes a quantitative approach to stock-picking.

    Fuchs and Taylor have developed a series of complex analytical models that helps them pick which REIT stocks to own, which to sell and which to sell short. Their models examine every property - some 30,000 - owned by 180 REITs, and assign various risk/reward values to them. They then predict how individual REITs perform relative to each other and run that data through various Monte Carlo simulations that ultimately help pick a portfolio of REIT stocks and positions, either long or short, where borrowed shares are sold in anticipation of a price drop.

    Fuchs and Taylor have tested their models retroactively and they say they would have generated returns of 28 percent over the past five years. For their hedge fund, they'll be aiming for net returns of 15 percent to 18 percent.

    Satisfied that their models work, Fuchs and Taylor are in talks with potential strategic investors, with an aim toward raising an initial $25 million for a fund that would have a total investment capacity of roughly $300 million.

    "We're blending Main Street and Wall Street techniques," explained Fuchs, who noted that a fair amount of fundamental analysis goes into Boxwoods model's. After all, he and Taylor closely examine every property owned by every REIT they track. And they use modern Wall Street quantitative techniques to determine which stocks to buy - and which to sell.

    While relative newcomers to the hedge-fund world, Fuchs and Taylor have deep backgrounds in real estate research and quantitative economics. Fuchs most recently was with GMAC Institutional Advisors, where he was helping develop risk analytics tools. Before that, he spent seven years at REIS Inc., as head of product development.

    Taylor, meanwhile, has some 15 years of experience in quantitative risk modeling. He was a senior economist at REIS and more recently provided consulting services to UBS Asset Management and GMAC. While at UBS, Taylor developed equity allocation models for several hedge funds.

    Reprinted with permission of Commercial Real Estate Direct. Copyright © 2004 FM Financial Publishing LLC

  • Taylor, Michaell A. and Geoffrey Rubin. "Raising the Bar: Simulation as a Tool for Assessing Risk for Real Estate Properties and Portfolios."Real Estate Finance. Vol. 18. No. 4 (2002), pps. 18-34.
  • Taylor, Michaell A., Geoffrey Rubin and Lloyd Lynford. "Submarkets Matter! Applying Market Information to Asset-Specific Decisions."Real Estate Finance. Vol. 17. No. 3 (2000), pps. 7-26.
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