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 | Term | 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% |