Interest Rate Derivatives – Ben Katon

Weidner Apartments

They know where pitfalls lie in the documents, in the details…We’ve specifically benefited from their long time in the marketplace.

Ben Katon: CFO, Weidner Apartments

Derivative Logic has done a great job for us. We’ve known and worked with Rex for coming up on eight plus years at this point.

When we do floating rate loans with Fannie Mae they have at times required that we purchase interest rate caps. Rex has managed the cap negotiating and purchase process for us on those Fannie Mae loans. We use them as a baseline to make
sure we’re getting the best deal in the marketplace. They shop our deal to find the most competitive execution.

Derivative Logic has been very aggressive in getting us what we feel to be the best deals in the marketplace on each of our trades. They’ve worked well with my closing team to work up the process and take as much of the work involved off our plate and onto themselves where possible. I think they’ve been very in tune with our needs. We don’t do derivative products very often, but when we do they are our first call.

More recently, with the upcoming change in the LIBOR as a benchmark, they are putting together a presentation for us to discuss what those changes mean to us as a borrower with floating rate debt. We’re contending with what’s in our existing documents as it relates to LIBOR transfer language. Derivative Logic is educating us and our primary general counsel as to what these upcoming changes might look like and how best to structure our loan document language. We will put ourselves in the best position as we maneuver these uncharted waters.

We’ve specifically benefited from their long time in the marketplace.
Because they know the players, they’ve been able to let us know who are the bad actors. And who might be better players to work with than others. Which has been very helpful.

They know where pitfalls lie in the documents, in the details. So they’ve been very helpful to let us know what we don’t know. They have really filled in the gaps on some of those areas. They’ve definitely made us aware of where the pitfalls lie.

In today’s world, post recession, it’s much more of a specialty business. In the sense that, with Dodd-Frank and all the different laws and regulations that have come along,
its a huge amount of regulatory paperwork and undertaking that goes along with these trades. Having someone that’s familiar with
navigating those regulatory waters has been helpful. It’s become more of a time consuming process as time has gone on. Having someone who can guide you through that quickly and efficiently is very helpful.

What I’ve found and appreciated is Derivative Logic only charges us a fee for their advisory services, their fee is not associated with any product. Their interests are aligned with ours. They’re getting paid for their services as an advisor, not on any particular trade. They’re not trying to sell us products that aren’t important to us or that we wouldn’t need. They’re just very focused on specific activities or tasks we feel give us the best value in the market.

Ben Katon: CFO, Weidner Apartments

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