The Ackman-Ziff Real Estate Group Debt Market Sentiment and Lender Survey

The Ackman-Ziff Real Estate Group, LLC, has graciously provided us permission to print their lender survey which follows. Ackman-Ziff is a real estate investment banking firm based in New York.

Lender Appetite:

• Lenders continue to be more aggressive; citing pressure to put money out for strong sponsors with quality real estate. (Re)development and construction activity as well as interest in secondary/tertiary markets increasing
• Broader appetite for “durable” cash-flowing assets across all major asset classes. Transitional/value-add/development capital becoming more available
• Healthy market for financing note purchases and Discounted Pay-Off (“DPO”)

Lender Underwriting Approach:

• Fundamental real estate analysis is important; 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

Availability of Debt Capital:

• Significant amount of capital (public and private) available to support debt financing market
• Origination of CMBS well underway by commercial and investment banks; more than 25 capital sources originating for securitization; deep subordinate debt market
• Life Insurance companies have become more aggressive; continue to focus on high quality assets in primary markets while seeking borrowers requesting long-term paper. Looking at forwards and select appetite for construction/permanent transactions
• Foreign Banks focused on institutional quality, cash-flowing “stable”  assets in major markets for “best in class” sponsors
• Money center banks are active and aggressive on cash flowing assets, value-add and development deals for strong sponsors