Lender Appetite
- Lenders continue to be selective; however 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”)
Lender Underwriting Approach
- Fundamental real estate analysis is important again; lenders focusing on basis
- Flight to quality. Lenders focused on underwriting of tenancy, market rents and occupancy statistics, lease rollover and associated costs
- Debt yield, DSCR and LTV tests reverting to the historic mean
Availability of Debt Capital
- Over $30 billion of “new 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 continue to be very selective, focusing on high quality assets in primary markets
- Foreign Banks focused on institutional quality, cash-flowing assets in major markets for “best in class” sponsors
- Money center banks remain active on smaller loan balances with existing clients on cash flowing assets; banks typically seeking some level of recourse
Source: The Ackman-Ziff Real Estate Group.
