Question for all the other monkeys that use warehouse lenders to finance your position - where have your quotes been over the last week or so? We've gone to both our lenders with strong deals this past week and their quotes (to the extent they're even willing to quote) have been 50 - 100bps above what they would have been a few weeks ago, at lower leverage levels. No attempt to re-margin our existing loans but if things don't settle soon I imagine that's coming too.
These are two of the most prominent warehouse lenders operating in the space, so I imagine this is the situation for nearly every other fund out there as well, but wanted to see how you all are reacting to this. Is anyone still signing up deals and assuming the market will settle down by the time you need to put it on the line/ are you quoting spreads 100+ bps above where you would have been a few weeks ago/something else?
We are trying to figure out how we're going to handle now but this appears to me like a pretty significant stressor on the bridge financing space in the near-term.
Mostly same spreads. Have they talked to you about re-margining your hotel loans? Generally quoting is useless right now since the cost of capital is unknown unless you're comfortable holding the loan on your books at the current coupon.
No attempt at re-margining yet, but all of our hospitality assets are under-levered on our warehouse so we have some built in cushion. They are asking some pretty heavy asset management questions, which it sounds like they're doing portfolio wide, so I imagine some lenders are going to get the margin call soon.
This doesn't answer your question, but for my own curiosity, who are the two main warehouse lenders? Walker is one right?
Everyone is guarding capital. Expect worse terms for now.
More market intel for those interested: mreits were hammered today, hearing of significant liquidity issues at some of the more highly levered lenders in the space. Credit desks at the banks are running liquidity checks on their counter-parties. Heard of two warehouse lenders that are not quoting, one that is way wide of prior spreads, and one that is maybe 25 - 50 bps wide of where they were before.
Most attention seems to be on the deals already on the lines and figuring out where the margin calls will hit (hospitality and retail so far). Value of underlying collateral and liquidity position of their counter-parties are what they're working through.
Anyone have borrowers already reaching out for interest relief? We have seen it from some of our hospitality sponsors so far. Imagine those that have chosen to go the CRE-CLO route are going to be the most constrained through restrictions on modifications.
Sounds like there is going to be some pretty severe disruption in this part of the lending space,
Do you have any idea what liquidity premiums are for 3/4/5 years today? Heard they are wider now and this affects returns for banks.
We have seen a ton of borrowers get retraded lately as a result of the disruption on the warehouse side of things.
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