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
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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