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Close-up: Bill Chiles

CBRE Capital Markets Director: Pinpointing financial strategies in real estate

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Bill Chiles calls his work in real estate finance "like finding a needle in a haystack."

When buyers seek a haystack of lenders for complex property deals, the challenge is in finding the one lender -- the needle -- that can best cater to the specifics.

That is why Chiles, director for CBRE Capital Markets in San Diego, employs what he calls "the full gamut of financial services" for clients looking for everything from ground-up construction loans to joint venture transactions.

Chiles' role is discerning and formulating a borrower's strategy and then structuring the financing to correspond: something that requires up-to-the-minute insight into markets, lending practices and an entity's ultimate goals.

CBRE Capital Markets' Bill Chiles says the local commercial real estate market is healthy. Photo: J. Kat Woronowicz

"We go into great detail initially trying to figure out what a buyer or borrower is looking to obtain," said Chiles, in his 11th year with CBRE Capital Markets, the finance arm for CB Richard Ellis (NYSE: CBG). "We try to figure out what they see in the deal, if it's a good acquisition from a replacement cost standpoint, and we try to put together a strategy ... and educate them on the financing and where the markets are at the moment."

And where are the markets at the moment?

To Chiles, the gloom accompanying the single-family residential real estate market -- which he deems "in a pretty dramatic slump" -- is not indicative of the broader market.

"On the commercial side, I think the market's incredibly healthy," said Chiles, who specializes in financing both multifamily housing deals and commercial property transactions.

"There's still a tremendous amount of capital out in the marketplace seeking few deals, so in San Diego specifically, it's going to drive high values and quite low cap rates because there's so much competition for the few deals that are out there."

Recently, Chiles was involved with several finance deals that would buttress such an outlook.

In the second quarter of 2007, he, along with CBRE's Scott Peterson, provided financing services for several different multifamily housing projects in North County.

For Property West, he and Peterson arranged $16.75 million in financing for Quail Point, a 160-unit multifamily apartment complex in Encinitas, along with $5.9 million for a 72-unit apartment complex in Escondido called The Mark and $4.4 million for the refinancing of Solana Point, a 32-unit multifamily complex in Solana Beach. Furthermore, Chiles said he recently closed several major refinance deals and locked a client into a "very attractive 10-year fixed rate interest loan" at the "tail end" of a favorable credit cycle.

Speaking to San Diego in particular, Chiles said the area's landlocked nature -- by Mexico to the south, the mountains to the east, Camp Pendleton to the north and the ocean to the west -- will continue to make San Diego "one of the highest investment markets in the country."

"Most of the transactions you see are going to be a revitalization of existing use, but there's not a lot of ground-up construction that's occurring in our particular market," he said. The paucity of land, then, would tend to drive property values upward over time.

At the same time, Chiles addressed how CB prepares itself for the erratic and volatile nature of the real estate market.

As the largest commercial real estate company in the world, CB's global platform and diversity of services enable it to "weather the bad times and capitalize on the good times," he said. "Obviously business is a lot easier when the market's thriving and very active, but you do need to put on a few different hats and try to handle the disposition side of things when the market cools down."

He cited as an example CB's decision to sell assets to condominium developers when the condominium market escalated, while selling the fractured deals to more opportunistic funds when the market cooled.

Chiles also pointed to the breadth of the company's real estate disciplines as a significant resource to real estate investors, mentioning its divisions in institutional investment, property management, leasing and financing. "We have the ability to obtain a vast amount of information, so our underwriting is really sound and backed up by all these different professionals here at CB," he said, adding that the interconnection of the different departments provides "real live information on virtually everything."

In particular, he stressed the importance of approaching a transaction not as a one-time deal but as an opportunity to advise a client and establish an enduring relationship.

"Our goal is to be an adviser for them on a long-term basis," said Chiles, who worked for Burnham Real Estate before joining the team at CBRE Capital Markets.

For Chiles, the complex challenges of financing real estate -- something he has embraced for 18 years now -- come down to getting to know clients while having a finger on the market pulse. The rest is just searching for needles.

McRoskey is a San Diego-based freelance writer.

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