The Ackman-Ziff Real Estate Group has graciously provided us permission to print their fourth quarter 2010 lender survey which follows. Ackman-Ziff is a real estate investment banking firm based in New York.
Lender Underwriting Approach
- Lenders have become more aggressive versus 6-12 months ago, citing pressure to put money out for strong sponsors with quality real estate
- Broader appetite for "durable" cash-flowing assets across all major asset classes
- Flourishing market for financing note purchases and Discounted Pay-Off ("DPO")
Availability of Debt Capital
- Fundamental real estate analysis is important again; lenders focusing on "basis"
- Lenders remain focused on underwriting of tenancy, market rents and occupancy statistics, lease rollover and associated costs
- Debt yield, DSCR & LTV tests reverting to historic mean
- Significant amount of capital (public and private) available to support debt financing market
- Origination of "CMBS/Non-TALF Securitization" in progress by commercial and investment banks
- Life Insurance companies have become more aggressive; continue to focus on high quality assets in primary markets
- Foreign Banks focused on institutional quality, cash-flowing stable assets in major markets for best- in- class sponsors
- Money center banks are more active on smaller loan balances with existing clients for cash flowing assets; banks typically seeking some level of recourse