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May 31, 2024
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Insurance companies
Currently financing affordable housing (and some workforce housing) and construction to perm loans are still being priced, but the volatility is having borrowers scrambling to rate lock and close asap. GSEs and commercial banks are always going to be the big players in terms of volume.
Where are you seeing pricing?
Also life insurance companies dominate the construction/perm space because of the long durations on the liability side of their balance sheets. Banks don't really want 7-10 deals and Freddie and Fannie don't really do value add or construction.
MMaybe your doing HUD deals?
Dumb question, work in IB but interviewing for some RE roles. What are the usual types of financings for RE
construction loan, then gets refinanced to permanent loan once CofO Is achieved? where do bridge loans come into play, just backup plan in case lenders get scared and developer is in tight squeeze?
For cash flowing core or VA assets with no heavy lifting, it’s just straight to permanent loans right?
what are the general durations and terms of these loans.
I know this is a lot so open to book suggestions, if you have any lol
We're doing private placements, so long term bonds at higher leverage than life insurance companies. Spreads on TE have been ~20-30bps over Freddie's, but things are changing very quickly.
60%-65%LTC 10yr Treasury + 200-245 bps for pricing right now. You can go as little as 5-7 yrs and as long as 30 yrs. Typical groups are liquid and lending. If you hire a good debt broker they’ll know 😉
EDIT: DSCR is becoming more relevant than DY in UW due to rising rates. Really hard to get these deals to pencil up to 65% LTC
Can you share more about why DSCR is becoming more important than DY?
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