Sponsored by:

"Both CMBS and REITs serve to connect international capital markets to commercial real estate. The fact that one-in-five dollars of mortgage debt is now in CMBS, and that investors hold $1 trillion of REIT stock and CMBS speaks volumes about the effectiveness of that connection." —Jamie Woodwell, MBA's senior director of commercial/multifamily research.

MBA Expresses Concern over Flood Insurance Bill
Without TRIEA, Insurance Ratings Can Change, Aon Says
New Construction Gets Defensive for Hurricane Season
Briefs: 'Market Matters' in DQs, Defeasance, Moody's Says

CMBS, REITs Evolve Past $1 Trillion Mark

Hotel Development Opportunities Go to China

GE Real Estate Finances $176M to Winston Hotels REIT

MBA Offers Opportunities for Involvement
Path to Diversity Scholarship Deadline June 14
CampusMBA CTE Awards Entry Deadline June 19

Soulis Finds Strong Support on Road to CMB

'Green Buildings' Generate New Energy for Office

"As we struggle with how best to modify this program in the aftermath of the Gulf Coast hurricanes last year, MBA believes that proposals, such as some of those in this bill, may result in an extension of the flood insurance requirements that could have unintended consequences including increasing the cost of homeownership, increasing delinquencies and foreclosures and reducing property values," said Kurt Pfotenhauer, MBA’s senior vice president for government affairs.

MBA's position on the bill include:

• MBA supports language in the bill requiring strict standards for updating flood maps;

• MBA is concerned with a provision in the bill that would eliminate the current maximum annual cap on penalties, and would support inclusion of a provision to exempt non-material violations of flood insurance purchase requirements;

• MBA opposes extending mandatory purchase requirements to state-chartered financial institutions not insured by the Federal Deposit Insurance Corp.; and

• MBA believes the provision for a phase-in of full actuarial premiums on pre-FIRM properties and the mandatory purchase of flood insurance on residual risk properties may cause affordability problems for current homeowners and may negatively impact property values.

"MBA believes the NFIP is an important program that helps homeowners maintain the value of their property and we are committed to thoughtful and appropriate reforms to the program," said Pfotenhauer. "We look forward to working with the Committee to address our concerns, avoid unintended consequences, and bring a bill to the Senate floor that is workable for industry and consumers."
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Without TRIEA, Insurance Ratings Can Change, Aon Says
MBA (6/8/2006) Murray, Michael

Aon Corp., Chicago, warned the U.S. Treasury of the economic dangers in letting the Terrorism Risk Insurance Extension Act of 2005 (TRIEA) expire without a replacement reinsurance backstop.

In its response to the Treasury’s “request for comment” on TRIEA, Aon said insurance ratings agencies imposed "fundamentally higher" capital requirements and loss thresholds on insurance carriers.

Aaron Davis , property director at Aon, said the role of rating agencies will be a key factor in the future of terrorism risk transfer--whether TRIA expires at the end of 2007, extends into the future or another terrorism backstop mechanism replaces it.  Davis said TRIEA's potential expiration at the end of 2007 becomes more disconcerting for the property insurance marketplace after the natural catastrophes of 2005 as the agencies wanted to ensure that a catastrophe on the scale of Hurricane Katrina, followed closely in time by another terrorist strike on the scale of 9/11, would not exhaust industry surpluses available to pay claims.

"The significantly higher cost of conducting business that would follow a lowered rating, or maintaining the higher capital requirements, would provide a momentous disincentive for a majority of insurance carriers to write terrorism insurance once TRIEA expires at the end of next year," Davis said.

The $100 billion certified terrorism reinsurance provided by TRIA has effectively increased the total market capacity for terrorism coverage in the U.S. by more than 80 percent and, to the benefit of U.S. policyholders, significantly lowered terrorism coverage costs. Davis said premiums paid by U.S. businesses for terrorism insurance have fallen by nearly 50 percent since TRIA passed in 2002, according to Davis.

Without mechanisms like TRIA, Standard & Poor's has said it may lower its investment ratings of insurance companies that offer terrorism insurance. Davis said the changes to rating agency capital adequacy requirements, coupled with possible changes to natural catastrophe models, could raise expected loss severity and frequency assumptions and represent a fundamental change to the property insurance marketplace. The changes would result in long-term pricing and capacity constraints that would further aggravate the market with the disappearance of TRIA at the end of 2007, he noted.

"Within the context of these property insurance pressures, we hope that the U.S. Treasury and all parties with a vested interest in maintaining affordable and available terrorism insurance capacity will reconsider their positions on the issue of TRIA's future and work diligently to provide a long-term solution to terrorism insurance in the U.S.," Davis said.
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New Construction Gets Defensive for Hurricane Season
MBA (6/8/2006) Murray, Michael

Hurricane experts forecast four to six “major” hurricanes in the North Atlantic as multifamily developers prepare new construction and rehabilitation measures to defend against storms, rising water and potential mold.

"Whether we face an active hurricane season or a below-normal season, the crucial message for every person is the same: prepare, prepare, prepare," said Max Mayfield, director of the National Oceanic and Atmospheric Administration (NOAA)  National Hurricane Center. NOAA’s National Hurricane Preparedness Week ended Saturday; hurricane season officially started yesterday. It runs from June 1 to November 30, with mid-August through October the strongest parts of the season.

The NOAA predicted 13 to 16 named storms this year, eight to 10 named storms turning into hurricanes, and four to six storms at Category 3 strength or higher in the north Atlantic.

"Although NOAA is not forecasting a repeat of last year's season, the potential for hurricanes striking the U.S. is high," said retired Navy Vice Admiral Conrad Lautenbacher, undersecretary of commerce for oceans and atmosphere and an NOAA administrator.

Procacci Development Corp., Boca Raton, Fla., constructs Class A office buildings designed to withstand 185 mile per hour winds. The buildings include a solid concrete roof, concrete, steel reinforced tilt-up wall panel exteriors, concrete columns, beams and floor composite support systems for second, third and fourth floors and roof deck and floor capacity with a 100 pound average live load.

Phillip Procacci, president of Procacci Development Corp., said the emergency back-up diesel generator will have a 20,000 gallon underground fuel tank allowing for 100 percent back-up electrical service for base building life safety. It will also have HVAC systems and emergency diesel generators protected in an independent enclosure designed to withstand 185 mile per hour winds.

This year, Procacci acquired additional land parcels at Crossroads at Dolphin Commerce Center in Miami for future development, broke ground on Phase I of Crossroads at Dolphin Commerce Center. Phase I will consist of one class “A” Hurricane-Resistant office building of nearly 90,000 square feet and a warehouse planned of a similar size. Last year, the development company broke ground on two, four-story, 70,000 square foot class “A” Hurricane-Resistant office buildings at Emerald View at Vista Center in West Palm Beach, Fla.

Warmer ocean water combined with lower wind shear, weaker easterly trade winds and a more favorable wind pattern in the mid-levels of the atmosphere, collectively favor storm development in greater numbers and intensity, according to NOAA Warm water is the energy source for storms while favorable wind patterns limit the wind shear that can tear apart a storm's building cloud structure.

With driving rain, flood water and moisture, mold is the usual aftermath. Tom Blakeley, CEO of American MoldGuard, San Juan Capistrano, Calif., said areas with the highest risk of flood include Biloxi, Miss., New Orleans and the Carolinas. Blakey noted that multifamily properties have the highest risk in class action lawsuits dealing with mold cases.

“We are just now starting to get in front of the insurance companies as well as the lenders,” Blakeley said. “The lenders are the ones that are really holding the bag…Lenders are starting to become more aware that they may have more influence on how buildings are constructed because they are the lenders. In terms of looking forward into future risk or liability, it is a risk management issue for a lender.”

American MoldGuard prepares at the time of construction with materials to prevent mold from driving rain during the storm and moisture following a storm. In the frame stage, American MoldGuard could remove visible contamination from the base plate to the ceiling choices with soda blasting technology, literally using baking soda to remove the contamination.

“In the event of a flood, there would be wet wood but there would not be the resulting contamination, which is where things get pricey,” Blakeley said.
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Briefs: 'Market Matters' in DQs, Defeasance, Moody's Says
MBA (6/8/2006) Murray, Michael

Moody's Investors Service, New York, described the relationship between local commercial real estate property values and the credit quality of U.S. commercial mortgage-backed securities (CMBS) in a report titled "US CMBS: Property Market Performance Drives Delinquencies and Defeasance."

Sally Gordon, senior vice president at Moody's, said that the report quantifies and demonstrates the relationships between changes in property value, delinquency, and defeasance. After researching more than 200 asset class and real estate market pairings from 2003 through 2005, the ratings agency determined that CMBS securitizations have more defeasances and fewer delinquencies as property values rise.

Delinquencies were 12 times more common in weak markets than among average markets, and the strongest markets had half as many delinquencies as average markets. Moody's found that when commercial real estate values increased, collective delinquencies of underlying loans dropped by both value and number.

While the number of delinquencies in the underperforming markets increased by nearly three times as much as those of average markets and markets with the greatest increase in value (with a property value increase of more than 50 percent) saw delinquencies decline to nearly one-fourth of the average, property values fell by more than 10 percent in average performing markets (property value increases of 20 percent to 30 percent).

Stronger property values created a climate ripe for defeasance, which boosted a securitization's credit quality. Last year's volume of defeasance was four times greater than the previous year's volume and more than twice the total volume of defeasance in all prior years combined.

Moody's study of 2003 to 2005 loans also included cap rate compression during a time of falling cap rates and positive property market fundamentals. Moody's said the cap rates reduced many potentially drastic property value drops into much smaller declines and helped change some slight property value decreases into small increases.

"Simply put, the market matters," Gordon said.
*****

CWCapital Asset Management (CWCAM), Needham, Mass., announced it is special servicer on 20 separate commercial mortgage backed securities (CMBS) transactions with 17 previously issued deals specially serviced by Capmark (formerly GMAC Commercial Mortgage ), Horsham, Pa. The remaining three transactions are new CMBS deals.

CWCAM announced in February it was special servicer for 24 transactions serviced by a subsidiary of CRIIMI MAE Inc. According to CWCAM, it is the named special servicer on 69 transactions supported by more than 7,800 loans with an outstanding balance of more than $70 billion. CWCAM performs special servicing on mezzanine loans and B Notes, and it acts as special servicer for CDO issuances. The company also performs third party special servicing for non-affiliated subordinated CMBS purchaser.

David Iannarone, managing director of CWCAM, said the firm is "well-positioned to maximize recoveries for CMBS and other commercial mortgage investors” based on its infrastructure and employee specialists.

Chuck Spetka, president of CWCapital Investments and CWCAM said the company's expertise in special servicing provides greater depth to its investment management business and makes it unique in the marketplace. CWCAM holds special servicing appointment rights to 25 more CMBS pools managed by others. The additional transactions bring CWCAM’s total CMBS assets under management to 94 transactions totaling nearly $100 billion.
*****

Silver Hill Financial, a Miami-based small-balance commercial mortgage lender, partnered with the Duncan Group to power a commercial lending section in Duncan's Mortgage Mastery Club (MMC).

The MMC will provide downloadable commercial lending tools to businesses, or residential mortgage brokers, who want to expand into small-balance commercial loans as Silver Hill Financial did in 2003.

Silver Hill will provide its residential brokers with "Scripts for Success," "High Trust Selling tools," and links to training and marketing resources for the transition into commercial lending.
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The average year-over-year growth in equity market capitalization increased 27 percent from 1990 to 2005. While commercial mortgage-backed securities (CMBS) “ten-fold in 10 years,” the real estate investment trust (REIT) industry increased from $57 billion in 1995 to $337.8 billion as of April 30, according to statistics from the National Association of Real Estate Investment Trusts (NAREIT) and the Commercial Mortgage Securities Association (CMSA).

Margie Custis, president of CMSA, said CMBS represents more than two-thirds of the $1 trillion mark as it helped provide liquidity and transparency in commercial real estate.

“It has helped fuel the growth and stability of the commercial real estate market by providing a liquid and transparent investment product for investors and providing competitively priced loans for borrowers,” Custis said.

Ettore Santucci, partner at Goodwin/Procter, Boston, said the ability of the markets to analyze and price real estate in the different property sectors makes commercial real estate more of an asset class now than in the past.

“The CMBS market has actually done a wonderful job at developing a quantitative criteria for really looking at EBITDA [earnings before interest, taxes, depreciation and amortization] cash flow for real estate in as compelling and rigorous a way as [analysts] look at all whole other cash flows in other industries,” Santucci said. “Once the capital markets learn how to price and analyze an asset class, they rarely forget that [in the short term]. The basic maturity or rigor that is now embedded in the asset class is here to stay and I think both the debt side of CMBS and the equity side of public REITs are going to continue to succeed in that asset class as much as, down the line, cash flows continue to be healthy.”

The CMBS market picked up where it left off in the first quarter as mortgage banker originations of CMBS loans increased 35.1 percent, according to the Mortgage Bankers Association’s quarterly survey of commercial/multifamily originations. The increases added to a record year in CMBS with $164.5 billion in loan originations as CMBS conduits were the largest reported investor group with 47.6 percent of total originations, MBA said. Top firms originated a significant share of the volume with Wachovia, Lehman Brothers, Column Financial, Capmark Financial and JP Morgan, totaling $80.7 billion in combined originations while 79 individual firms originated loans for the CMBS market.

"Both CMBS and REITs serve to connect international capital markets to commercial real estate.  The fact that one-in-five dollars of mortgage debt is now in CMBS, and that investors hold $1 trillion of REIT stock and CMBS speaks volumes about the effectiveness of that connection," said Jamie Woodwell, senior director of commercial/multifamily research at MBA.

Santucci said that CMBS and REIT analysts now use sophisticated quantitative and modeling tools to help the CMBS and REIT markets "exponentially" understand commercial real estate cash flows in depth. He said REITs and CMBS have a level of business or market intelligence on a geographic level with information that drives supply and demand on a formalized apples-to-apples basis to discipline the market from overconstruction as witnessed during the Savings and Loans (S&L) crisis in the late 1980s.

"The quality of the analysis, the quality of the forecasts is enormously better...The ability of a CMBS analyst to underwrite debt is light years away from the ability of an S&L credit officer to decide whether to finance a suburban office building," Santucci said. "It is the monkey and the 21st century PhD in terms of evolution—totally different creatures. They don't apply the same tools, they don't have the same motivations, their financial well-being is fueled by totally different things...it is just a totally different model. It is a combination of the tools available—even the technology available to analyze CMBS securities is incredible and that didn't exist 15 or 20 years ago."

In equity, the market value of equity REITs stood at $318.2 billion, including $301.5 billion of common shares and another $16.7 billion of preferred stock, according to NAREIT’s 2005 statistics. Equity market capitalization of publicly traded real estate companies not electing REIT status added $21.2 billion to the total amount.

Steven Wechsler, president and CEO of NAREIT, said the $1 trillion milestone reflects investors from around the world receiving the economic benefits of securitized commercial real estate.

“The REIT industry’s evolution in the last decade alone has been both eyecatching and breathtaking,” Wechsler said. “What we refer to as the modern REIT era that began approximately 15 years ago gave rise to the securitization of a large number of real estate companies. Their stock offerings have made it possible for investors large and small to gain access to, and efficiently and easily invest in, large-scale commercial properties. Just as CMBS has helped a broader range of investors to the commercial mortgage market.”
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In China, large cities along the coast and manufacturing centers slightly inland are leading hotel development. Modern infrastructure systems—airports, highways, mass transit—are already in place and LE said pipelines seeded for 15 years are causing world-class hotels to come "out of the ground at a phenomenal pace."

"It's a development period like none other," said Patrick Ford, president of LE. "It's being ratcheted forward by an explosion of investment capital into the fastest- growing economy in the world. China also has the fastest-growing inbound tourist flows of any country and is projected to be the largest tourist destination in the world by 2020. China is in a terrific hurry to modernize and possesses an intense desire to build world-class accommodations for the 2008 Olympic Games and for a series of important worldwide exhibitions already scheduled. Lodging development in China is led by three cities with some of the most dynamic development pipelines anywhere."

Little opportunity exists for small hotel companies or investor groups in China, but enormous opportunity for major international hotel companies with extensive resources who already have development and operating groups in the region, according to LE.

As Beijing prepares to host the 2008 Olympic Games, 25 hotels in the pipeline have 18 four- or five-star hotels and 14 are under construction. LE said recent statements from Chinese officials indicate a need for another 65 hotels of various star ratings for the Olympics.

Shanghai, with 24 projects in the pipeline and 14 under construction, includes 19 as four- or five-star operations. "The Pudong region on the east side of the Huangpu River, arguably the most successful Special Economic Zone (SEZ) anywhere, ever, has been sprouting world-class hotels in the last three years and will continue to do so through the end of the decade," Ford said.

Macau, adjacent to destination resort areas of Taipa and Coloane, has 23 projects in the pipeline, and nine are new Las Vegas-style casino projects. Ford said the goal for Macau is not to rival but to eventually surpass Las Vegas as an international gaming destination. The average size for the planned projects is more than 700 rooms in Macau and 14 projects are now under construction.
  
"Significantly, important Las Vegas developers are already heavily invested in Macau:  Sheldon Adelson of the Sands/Venetian, MGM Grand and Steve Wynn," Ford said.

U.S.-based companies, including Marriott, Starwood, Hyatt and Hilton, and international companies, such as Four Seasons, InterContinental, Kempinski and Accor, made early inroads into the region. Also, Asia's Shangri-La is achieving rapid growth in China, according to LE.

"There has not been such a building spree like this in the history of lodging," Ford said. "The capital inflows are enormous.  Development growth is incredible and appears solid at least into the next decade, with a critical proviso that there continues to be political and economic stability."

China has 188 hotels in the Lodging Development Pipeline, or 48 percent of all development in Asia.  Nearly 72,000 rooms are planned, and 153 of the 188 projects are more than 200 rooms. Nearly 135 are four- or five-star rated and 124 projects, or 66 percent of the 188 total, are under construction. The pipeline shows 46 of the 124 as scheduled to open in the second half of this year.

India, second largest in the pipeline, includes 78 hotel projects planning 12,244 rooms. India's project count is evenly distributed over the three construction stages—under construction, scheduled to start in the next 12 Months and early planning--as numbers continue to increase. Projects are smaller, averaging nearly 150 rooms with 44 percent of the projects located near outsourcing office centers, including Bangalore, Chennai, Hyderabad and Mumbai. The remaining projects are widely dispersed throughout the country. More than half are one- to three-star economy and mid-market classification reflecting a high level of native travel within the country, LE said. Nearly 40  projects, or 49 percent, are classified as four- or five-star operations.

Thailand, with 39 projects, is third in the pipeline, as 79 percent of projects are under construction. LE said many of the projects are part of the redevelopment surge after the December 2004 tsunami.

According to LE, there are 386 construction projects in acitve planning with 111,285 rooms. Developers anticipate the average project size at 288 rooms, but will likely decline as the process unfolds and projects migrate forward.  Meanwhile, 68 percent of all projects will be four- and five-star hotels, located in Urban Centers and neighboring suburbs, or in resort and casino destinations.

LE developed the Asia Pipeline in response to its "Wall Street clients" using offshore development as a key factor in their analysis of U.S.-based hotel companies and real estate investment groups.

"LE's Asia Pipeline covers all countries in the region from Japan in the north to Australia in the south, and from Polynesia in the east to Afghanistan in the west," Ford said. "It's been a massive task to compile detailed information for each individual hotel project in the region."
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GE Real Estate structured the deal as 16 separate loans without cross-collateralization to provide Winston Hotels with optimal flexibility in managing its portfolio. As of March 31, Winston Hotels owned or was invested in 55 hotel properties in 17 states having an aggregate of 7,542 rooms.

“We were able to lock in attractive long-term rates with a significant interest-only period, while structuring the debt to provide optimal flexibility," said Joe Green, president and CFO at Winston.

Last week, GE Real Estate announced it partnered with The Muller Co., a Laguna Hills, Calif. owner and developer of commercial office buildings, in a joint venture acquisition of the Motorola Phoenix Campus in Tempe, Ariz.

Muller paid $41 million for the four-building, 334,000 square-foot property, which was purchased as a joint venture with GE Real Estate’s North America Equity Division. Muller plans to create value by leasing the vacant building and possibly developing or selling 3.5 acres of excess land included in the collateral.

The Motorola Phoenix Campus is 73 percent leased to Motorola Computer Group, a division of Motorola’s Embedded Communications Computing Group, which occupies three buildings.
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MBA members can get involved by joining committees, participating in working groups or submitting articles to MBA publications. As a member, there are various levels of involvement:

• Join a Committee—you can sign up for as many committees as interest you. The committees are organized by industry level interests. 

Click here to view list of committees with description and also sign up for a committee through our easy Committee Enrollment Form.

• Join a Working Group—most of the work on specific issues is discussed and vetted in our subcommittees, generally called working groups. You may join as many working groups as you would like. To join a working group, please contact the MBA staff member responsible for the working group you are interested in joining. 

Click here to view a list of the MBA committees and the designated staff member

• Attend a Committee Meeting—all committees meet in person at least once a year at the CREF Convention. You can attend committee meetings to decide if you would like to join the committee(s). The committee meetings at CREF will be held on Sunday, February 4, 2007 at the Manchester Grand Hyatt San Diego.

Click here for more information on MBA's CREF/Multifamily Housing Convention & Expo 2007, February 4-7. Many committees also hold conference calls throughout the year.

• Write an article for MBA's Commercial/Multifamily NewsLink—we encourage our members to write articles on issues facing the commercial real estate/multifamily finance industry. Please send any article ideas and written pieces to Mark Cobb at mcobb@mortgagebankers.org.

• Write an in-depth Mortgage Banking article —members are welcome to write a full length article for the Mortgage Banking magazine. Visit the Mortgage Banking web site to learn more about the magazine at: http://www.mortgagebankingmagazine.com/editor/.

For more information about how to submit an article, please review the Mortgage Banking Writers Guidelines at: http://www.mortgagebankingmagazine.com/pdf/writers.pdf or contact Editor-in-Chief, Janet Hewitt at jhewitt@mortgagebankers.org.

Through participation, MBA can focus its efforts on how best to serve membership needs. If you have any additional questions on how to participate, please contact cref@mortgagebankers.org.
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Path to Diversity Scholarship Deadline June 14
MBA (6/8/2006) MBA Staff

The Mortgage Bankers Association is accepting applications for the Path to Diversity scholarship program. The application deadline is Wednesday, June 14.

The Path to Diversity scholarship program allows industry professionals from diverse backgrounds to advance their professional growth and career development through CampusMBA, the education arm of MBA. Scholars receive a $2,495 voucher to use toward CampusMBA education courses and products. Choose from residential or commercial offerings delivered via distance learning or classroom-based training.

For details about the scholarship program, go to http://www.mortgagebankers.org/pathtodiversity/empschol/.

The Path to Diversity scholarship program provides the opportunity for employers to encourage and promote employees from diverse backgrounds, by offering employees educational scholarships to CampusMBA so that they can use to advance their professional growth and career development. Additionally, employers can provide a valuable educational resource to your interns from under-represented segments of the community through CampusMBA's distance learning program.

CampusMBA offers residential and commercial real estate finance training in classroom and distance learning delivery modes. This educational service is provided to MBA and state MBA members to help increase and promote diversity throughout the industry.

Scholarship applications are reviewed on a regular basis by the scholarship committee.

To download the application, go to http://www.mortgagebankers.org/PathToDiversity/empschol/Application.htm.
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CampusMBA CTE Awards Entry Deadline June 19
MBA (6/8/2006) MBA Staff

The deadline for submissions to CampusMBA’s 2006 Corporate Training and Education (CTE) Awards program is June 19. The CTE Awards, developed by CampusMBA, the educational arm of the Mortgage Bankers Association, are designed to recognize residential and commercial mortgage company mortgage banking training programs for their dedication to and innovation in real estate finance industry education.
 
"So many companies in our industry are developing and conducting very innovative and creative education and training programs for their employees and deserve recognition for their effort and dedication to our industry and our employees," said Wendy Tucker, chair of the MBA Residential Education Committee and customer education director for Option One Mortgage Corp.
 
Entries are divided into two categories: large residential and commercial companies (1,000 employees or more) and small residential and commercial companies (fewer than 1,000 employees). Within each award category, two large company and two small company entries can be awarded, one as a winner and one as an honorable mention. In total, 16 entries can receive award recognition.
 
"Our industry overall is a complicated one, and becomes even more so when looking at just the commercial sector or just the residential sector," said Daniel Phelan, CMB, CRI, chair of the MBA Commercial Board of Governors’ Education Committee and president and CEO of Pacific Southwest Realty Services. "Professional development and training professionals have recognized this fact and work hard to make sure their company's employees receive top-notch training so they can provide the best service to consumers."
 
The two categories are as follows:
 
The Best Overall Corporate Training Program Award category recognizes the corporate training program that best exemplifies innovation and effectiveness. To be considered for this honor, the training program should reflect a blended learning approach through various modalities. Award selection is based on the following:

• Program development and organization history;
• Organization and employee acceptance;
• Obstacles overcome while implementing the program;
• Creativity and innovation in program delivery, marketing, and assessment; and
• Beneficial impact to your organization and the mortgage banking industry.

The Education Advocate of the Year Award category recognizes an industry professional who facilitates, advocates, and promotes education within the industry, his or her company and the community. Award selection is based on:

• A statement describing why the nominee deserves this award;
• Beneficial impact on training within the nominee's company;
• Obstacles and/or challenges overcome; and
• Outstanding accomplishments or innovative projects completed during the past year.

To enter your company or to nominate a colleague, visit www.campusmba.org/cte to download the CTE Award Application. All award entries are due June 19. Award presentations will take place at CampusMBA's Trainer's Roundtable in Washington, D.C., July 26-27. All winners will be notified on or around June 30.
 
To be eligible to apply for the CTE Awards, nominated training program must be within an MBA member company and nominated individuals must be employed by an MBA member company. There is a $200 fee required with all applications. CampusMBA contributes all monies collected from application fees to the Path to Diversity Scholarship Fund.
 
To learn more, download the brochure or the application visit www.campusmba.org/cte, or send an email to cteawards@mortgagebankers.org. For more information on CampusMBA, winner of the 2005 Most Innovative Industry Resource CUBIC Award, visit www.campusmba.org or call (800) 348-8653.
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Soulis learned about the CMB program while reading the CampusMBA Web site and found she was interested in all the required classes on the road to obtaining the designation.

The CMB designation was established by the Mortgage Bankers Association in 1973 for high-caliber professionals in the industry to distinguish themselves as leaders. The road to obtaining the designation challenges the student with several classes that prepare him or her for a cumulative six-hour written exam and one-hour oral exam.

“I think all the courses in the program are integral in obtaining the CMB,” Soulis said.

Soulis' sponsor, Midland Senior Vice President Jan Sternin, provided support and helped Soulis prepare for the written and oral exams until Soulis received her CMB at a graduation ceremony during MBA's 2006 Commercial/Multifamily Asset Administration & Technology Conference in Phoenix last month.

Soulis, now a CMB, said she would like to help promote support for MBA, and go "the extra mile" in the commercial mortgage servicing industry.

For Soulis, insurance, specifically flood and professional liability insurance, is the most important issue in the commercial mortgage industry today and needs to be addressed.

“Hurricane season has started again, and as you know they are expecting it to be bad. Commercial properties in areas that can get hit are having a difficult time obtaining affordable flood insurance as a result of last year’s hurricanes,” Soulis said. As for professional liability, she said nursing homes are required by law to have professional liability insurance in a number of locations, but it is impossible to get some nursing homes insured.

Soulis said legislatures can work to make flood and professional liability insurance affordable to commercial properties, and she believes the industry can help MBA in this endeavor.

To earn her CMB, Soulis juggled work, family and leisure time through "lots of planning," she said, but with a staff of eight associates, and fully behind the CMB program, Soulis now turns her support to her staff as they take at least one of the CMB classes each year.

“I will continue to go to MBA conferences that I can make it to, and I hope to help develop courses for the program,” Soulis said.
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“It is without question that as energy costs increase, higher rents will be required to support operating costs,” according to a February report from Cushman & Wakefield, New York. “Furthermore, a less efficient building will require higher rents to cover energy than one that is more energy efficient. This will make these less energy efficient buildings more difficult to lease as tenants face the possibility of greater pass-through of energy costs than in more energy efficient buildings.”

The Energy Department, however, said that as more energy-efficient equipment is adopted, energy intensity for major commercial end uses declines. Also, new construction must meet building codes and efficiency standards, offsetting potential increases in energy intensity or consumption per square foot of commercial floor space.

“Minimum efficiency standards…contribute to projected efficiency improvements in commercial space heating, space cooling, water heating, and lighting, moderating the growth in commercial energy demand,” the Energy Department said. “An increase in building shell efficiency also contributes to the trend.”

Energy-efficient office buildings, however, known as “green buildings,” are changing office construction and investment. In 2005, green buildings accounted for $10 billion of a $200 billion market, according to Tom Hicks, vice president at the Leadership in Energy and Design (LEED), developed by the U.S. Green Building Council (USGBC).

Hicks described green buildings as a win-win-win for people-planet-profit. “There is something in it for all of those angles,” he said.

“If it is a sustainable, positive building for the environment, [lenders] have a much more valuable asset less likely to be distressed or at risk in their overall portfolio,” said Carl Smith, CEO of Greenguard Environmental Institute, Atlanta. “If they have to flip the mortgage, the mortgage is going to be that much more valuable in the secondary market.”

The February Cushman & Wakefield report said that, theoretically, a more energy efficient building should "easily translate into a higher value." The report also said that energy efficiency is now a characteristic that building owners and investors should consider when valuing a property.

“In many cases, they are going to have a positive return very quickly,” said Eric Bowles, director of global research at CoreNet Global, Alanta.

Just as Internet and bandwidth access and fiber optic technology changed the definition of a class-A building within the past 15 years, energy-efficient building can also change how to define office buildings.

“Energy is one of the things likely to be the next step in the evolution of a class-A building, so a building that is not energy-efficient would have a hard time being considered class-A,” Bowles said.

LEED rates new construction, existing buildings and commercial interiors for buildings and projects. In August 1998, it released LEED for New Construction and Major Renovations (LEED-NC) as a green building rating system. The system was a guide focused on office buildings to distinguish high-quality green building characteristics. In November, the USGBC refined LEED-NC to reduce time, cost and paperwork for LEED Certification.

Cushman & Wakefield’s report said a growing number of tax incentives are available from federal, state and local government programs for green building construction. Also, as LEED enhances its ratings system, Hicks said green buildings will be able to expand into office-spec development. Green buildings were mainly built for new corporate headquarters and quasi-government building construction, but LEED for core and shell, a rating system scheduled for release from its pilot mode within the next few weeks, focuses on the spec market.

“We are getting a significant uptake relative to where that product is in its lifecycle,” Hicks said.

Green buildings can also be a win-win for insurers and lenders, but some analysts said insurers are taking a more conservative approach to premium reductions on green buildings although the potential is there for reductions in the future.

“I’m not sure if we are seeing that yet,” Hicks said.

Despite reports of higher construction costs in green buildings, the differences in costs continue to narrow as builders become more accustomed to energy-efficient buildings.

“Even a couple of years ago when the initial costs were 5 percent more, the operating costs clearly, clearly were less. But for some people, that wasn’t enough,” Smith said. 

As higher construction costs become the exception rather than the rule, green products and energy-efficient design could save costs over the life of the property and increase cash flow, according to Bowles.

“There is a tremendous opportunity for lenders and owners to understand the difference between the value provided by green buildings and typical building construction,” Bowles said. “It is important that lenders do understand that difference because it potentially does have a large impact on the value of the property down the road.”

Bowles also noted that landlords will need to speak with tenants about energy costs and compare office space, requiring tracking the energy history over a portfolio of properties.

“Most tenants in the future are going to want to see what the historical energy costs have been on a building before they sign a lease,” Bowles said.
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