Who is making loans in this environment? Have heard that many big banks like Wells Fargo are on the sidelines. It seems like the GSEs are lending, but with more structure, such as escrow requirements.
My bank, about $20 B in assets, is lending, but it's still somewhat unknown what we can get approved. We're requiring full recourse, lower leverage, and it will probably take some money pledged for Debt Service in the event that tenants can't pay.
Anecdotally, I have heard about some regional players lending with 12 months of debt service escrowed upfront.
I've seen a lot of this, anecdotally. 6-12 months worth of debt service being added as reserve.
The Fed.
There are loans to be had but even long term net lease industrial will go for over 4%
Still hearing loan deals flowing on the mortgage brokerage side. However, sentiment seems to be ‘if you don’t have a relationship with lender X or a DIRE need, wait’
Jeffries has led a couple L+1200 TLB deals in the past few weeks. Fully syndicated in the institutional market
Giving out free money in PPP “loans” at my commercial bank rn. RE debt fund I work at is still handing out development loans
Can confirm GSE's are still lending, with escrow requirements, and stricter DSCR requirements and lower leveraged, 75% LTV and below (mostly 70%) only from what I'm seeing.
Not just still lending, they're still giving out 10 year IO paper!
What spreads are GSE’s offering on 10-year loans?
what kind of Treasury floors are they putting in their quotes right now?
Fannie @ 90 bps
Freddie @ 60 bps
Freddie pricing is about 30 - 40 bps wide of Fannie, so it's close to a wash. That being said, rate locks are getting pushed out later into the process so a Fannie execution currently has close to 30 bps of treasury cushion, although still subject to movements in the MBS.
Just agreed to terms on suburban A MF construction deal. L + 250 about 25 to 35 bps wide of where we were seeing spreads pre COVID.
Assuming you brought the deal to the lender pre-crisis? Those are great terms and not likely you would get those if you were to go to market now.
Nope, brought to market right as the stay at home orders started
Ground up construction lending is almost non existent. Retail/hotel are not my specialty but I would imagine those are 0% chance of execution. Current personal experience: spec office, completely dead. Multifamily--where proceeds were available for 20+ lenders at 65% LTC pre-crisis, there are now only a couple of balance sheet lenders in the game, proceeds sized closer to 50% LTC with spreads L + 450 or higher.
I'm talking about ground up.
Can confirm GSE's are still lending and they will be getting more aggressive in the coming weeks. Spreads are still good, but there are treasury floors. There are also escrow requirements, which a lot of Borrower's haven't been willing to sign up for. As already mentioned here, structure has been a little more rigid (75% LTV requests getting approved at 70%, 1.25x requests to 1.30x, etc). Compared to the competition, the spreads and structure are strong. In my experience, Borrower's have only been stepping away due to the escrow requirements. Separately, I've seen the acquisition market get demolished so most of my deals have been refi's.
What's a GSE spread on a 10 year loan look like these days, and are they using floors?
As thddd mentioned, Freddie's floor is 0.60% and Fannie is 0.90%. Freddie 10 year would be ~2.80% on a 10 year. Expect spreads to drop a little bit soon. If there is a good amount of affordability to the deal (50%+), then the sponsor will get some spread breaks as well.
what would be some examples of escrow requirements?
6-12 months of debt service
6-12 months of tax, insurance, and reserves escrowed up front
Debt fund I'm at is specifically looking for pref/structured equity and Freddie SBL opportunities at the moment
I work for a european bank doing CRE balance sheet lending, and we're still lending to existing customers and am going through with the deals we previously committed to.
I wouldn't say we're actively seeking for new financing, but we're open to them and will try to make it work if it's an attractive deal. However, the slow activity in our group is largely driven by our portfolio commitment being capped by our European head office as they don't want to have too much US exposure.
My shop is still looking to originate. Our debt fund has stopped, but our B/S is still going strong. Don't do construction loans, but nearly everything else is fair game. LTV sweet spot between 50-65%. Recently quoted Libor + 240 on a 5YR for lease-up MF asset. PM me if anyone is interested. Southeast of the US only.
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