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

Lenders in the Market

 Institution

Loan Amount
(in $ Millions)

Term
(in years)

Rate

Insurance

$2 – $400

5 – 20

4.00% – 5.75%

Foreign Banks

$25 – $200

2 – 10

3.00% – 5.50%

Commercial Banks

$10 – $159

5 – 10

2.50% – 6.00%

Investment Banks

$7.5 – $300+

5 – 10

4.00% – 6.00%

Domestic Banks

$0.5 – $50

3 – 5

2.50% – 6.00%

Pension Funds

$10 – $75

5

5.00% – 6.00%

Private Lenders

$2 – $70

2 – 5

5.50% – 9.00%