Anyone in the CMBS industry know what debt yields the industry is allowing on 65-70% LTV IO loans for class A midtown office buildings?
Just putting together an analysis for defeasing a loan and I know we can get there on LTV and DSCR but the debt yield will be the limiting factor here. I don't want to reach out to our lenders for guidance yet because I don't want to get hounded by them once they know we're thinking about refi'ing.
Gracias
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Curious what others say, but my guess, which doesn't account for deal size, the quality of your rent roll, how much IO we're talking about, etc., is a constraint in the mid-high 7% range.
I was thinking mid to low 7's and hoping someone has heard of breaking into the 6's for the right deal. I'm hoping some conduit will break the mold to win a deal.
Highest quality class A building, large deal (over 250M), full IO, top sponsor.
7ish - ive been out of cmbs for a 9 months but thats the number i remember.
Yeah, in fairness, I don't play in the Class-A Manhattan office realm, so take my estimate with that bias. Your deal is a world apart from my typical deal.
The most aggressive senior-only CMBS quotes I've seen from competition are for high-quality multifamily deals, with debt yield requirements in the low 7%s.
We recently closed a conduit deal with a 7.75% DY - Multi-tenant office, Top 10 Market, 10 years I/O, Small deal-Sub $50MM.
SHB - in my opinion your thoughts are generally correct. CMBS is getting to 7.5% debt yield all day on high quality product and would very likely go to low 7s for Class A NYC office. Honestly wouldn't be shocked to see a 6 handle on something like this if great asset, location, sponsor, etc and still 65%-70% LTV. Idk about full term I/O on something in the 6s but have quoted it in the lows 7s.
Size will also be a factor. At $250MM you're still in a conduit securitization, get too much larger than that and it likely will have to go single-borrower which is a whole different execution
Great info from everyone, with color to give perspective on everyone's thoughts rather than just throwing numbers around. Bananas for all!
Even sub $250M could likely go single borrower execution. There are a number of deals actually in the pipeline right now in that range. Mostly Hotel/Retail though.
Recently, 200 Park went out at 8.8% all-in. 3 Bryant Park at 8.3. Single borrower though. As for conduit, most recent example I can think of is 150 Fifth Ave in GC29. Went out at 7.6. You can probably adjust downwards 10-20 bps if your loan has stronger asset quality. So I'd say 7.5 is realistic.
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