Lender Rankings
For difficulty to get in, how would the different CRE lenders of Debt fund, Lifeco, Bank, CMBS, agency, etc. rank? At origination level, how would compensation vary?
For difficulty to get in, how would the different CRE lenders of Debt fund, Lifeco, Bank, CMBS, agency, etc. rank? At origination level, how would compensation vary?
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Career Resources
Top tier debt fund (example: mesa west) > BB CMBS > BB Bank >top life co (pru, met, NYL etc) > super regional bank > less institutional debt fund > regional bank > smaller life co > community bank
When you say BB Bank and Top Life Co, do you mean balance sheet lending at those institutions?
By BB bank I meant balance sheet lending at JP Morgan for example. Life co I mean yeah it is probably going to be balance sheet right, a few have agency and I think pru has CMBS too.
Honestly if you want a super generalized answer my list above can be applied to the rankings for comp, prestige, exit ops, etc. They would all be pretty the same order ON AVERAGE.
Sorry forgot agency. Some of those will have agency origination and will fit in accordingly. Examples: Barings agency, keybank agency, pru agency, etc.
Thanks for the response. How would an agency arm at a well known bank compare to their balance sheet? Also, how would an agency not affilited with a bank rank?
I mean I think that is pretty obvious. Balance sheet (all property types) at PNC is for sure better than agency at PNC. Both in terms of career potential and exit ops.
Agency and non-bank hmmm. I would personally probably put that towards the bottom. This is partly personal preference because I think underwriting perm agency MF loans all day long sounds like a snoozer. If it's the only job or the first job out of school take it though. It's for sure good experience.
Can't comment on compensation as I only know my own vertical, however, you can't really say one is more difficult to get into than another. They will all be difficult. A debt fund may be 'sexier' to work at than a Life Co., but there are only so many positions to go around and realistically, people will take an analyst where they can get it. Once you're in, you can move to where you want to be. There may only be two or three openings at each shop, and an opening may not exist where you want to be when you are recruiting.
Take this with a grain of salt, but I also feel you can't rank them. Life Co., vs Bank vs debt fund are usually lending on different product. So it's subjective. If you want to do core lending a Life Co. is generally the spot to be, but if you want to go to do construction lending, it will be a fund or bank most likely. The top ranking place for you may not be the top ranking spot for me.
Best Lenders for Medium-Sized Deals (Originally Posted: 02/29/2016)
Which organizations would you all recommend among national lenders for the $2 - $30 million loan sizes? Direct lenders and brokerage companies. Not interested in specific individual referrals (because I don't have a specific deal I'm asking about)--just trying to get an idea of what organizations people would recommend for those small-to-medium loan sizes. Multifamly/retail/office/hotel.
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I'm a broker, this deal size is in my wheelhouse. Look, Chase is the biggest player nationally. I have extensive ties there. They closed $20Bil last year in the CTL division. Their closest competitor was less than half. One of the reps in the Bay Area closed $1Bil by herself. Their MF reps here in San Diego closed over $500mil each.
With that being said, they are a 5yr fixed lender and that's it. Very competitive on fees for refi's. But most of my clients want longer term fixed rates so I don't do much with Chase even though I know a lot of their staff here in Ca.
If you want to chat about other deals and lenders shoot me a PM.
You don't have to refi out of their 5-year product it rolls to floating rate, if my memory serves me. NYC area Chase was never competitive I'm not even sure we even had to get term sheets from them. They also don't touch construction. This is all based on acquisition pricing, never had a 50% LTV deal or below.
Also their "loan officers" are internal brokers who get paid a fee/spread instead of just a year end bonus.
Chase has been the most aggressive national lender for MF in my area.
Chase is competitive here as well. We are looking at them now for take out financing and a new construction loan. I can let you know what kind of terms they come in at.
WF BS group with out a doubt for straight forward deals. For MF construction we are getting L + 215 (completion guarantee, 25% principal amount guarantee, burn off upon stabilization), MF stabilized acquisitions we are getting L + 145. I will say they are trying to win additional business from our firm- hence the aggressive pricing. This is NYC.
I would love to hear what everyone else is borrowing at. Thanks guys.
Sounds like multifamily capital is abundant. But what about capital for other commercial real estate types, especially for construction? Who are the players in that?
Really depends on the deal size within that range and profile (for example, you're talking a whole different set of lenders for a $25MM stabilized multifamily loan than you are a $10MM bridge loan for a hotel in ramp up). In general, the cost of capital gets better when you get higher in size.
For fixed rate deals, I would recommend taking a look at the insurance companies, as well as the agencies (for multifamily refis). CMBS is still incredibly volatile and there are some regulations coming out that may cause spreads to blow out even further (including one that requires lenders to hold 5% of the loan on their balance sheet through the term).
Feel free to PM me for more detail
Chase and Wells have been super competitive recently, but once the deal closes and it goes to servicing, it is hit or miss if your asset manager gives a fuck about you (I've worked with people from both companies that are on either side of the fence). It can make it hard if you have a borrower request or an issue you are trying to work through.
We are on the higher side of your range, but my fund's philosophy, and one I subscribe to whole heartily, is to pay a little bit for the relationships (especially right now when loans are cheap) because in the long run it will save you time and money. That said, we've focused on insurance companies/smaller banks for our lending: BBVA Compass, TIAA FSB, Prudential and Metlife. We are also using HFF and Northmarq to place debt for us on a select basis (gotta keep the correspondents happy too).
For smaller deals, I've heard great things about Standard Corp, Lincoln Financial and Comerica, but I don't have experience with them.
Is it materially more expensive to place debt via a broker? Can you speak to the pros and cons of that?
The insurance companies have been major players in these size deals and in slightly larger ones ($50-200MM) in the Northeast/New England for awhile now. It's competitive out there. Lots of refis with 3-7 year bullet/balloon and tight spreads. The margins have been getting thinner on a lot of commercial deals, and the insurance companies are squeezing out larger local banks in these sized deals. GE Capital had a big presence in commercial RE in the region up until a year or two ago when they made a volitional effort to pull back their commercial dealings.
Of the "big banks," Wells Fargo seems to be the most engaged in these smaller or mid-sized "main street" deals.
Broker fees are usually 35bps - 50bps. We pay a little higher on smaller deals and it also slides as we do more business during the year. Also, if the broker gets servicing, we get a little break.
Pros: If you need special financing considerations, they know which lenders will consider what quickly. We did a reverse 1031 last year. There aren't a whole lot of lenders that will do those and it was worth the 200k to get us through the process cleanly and quickly. Brokers like repeat business so they are pretty much always willing to help you out if something is going wrong with the lender/loan. This goes even further if the broker's shop happens to have gotten the servicing for the deal. If they have the servicing, then you are even better off for the term of the loan if you have a borrower request.
Cons Not all lenders work with brokers Because servicing can be involved, alignment of interests can be difficult.
We generally go direct for most of our normal more vanilla deals. If we have something weird (like the reverse 1031 or the hotel we are just about to buy), then we usually place with a broker.
Can you all speak to recourse for construction deals? At what LTC (or LTV) is it typical in this market for lenders to waive recourse?
Disclaimer: I deal primarily in a single industry and work for a more conservative lender, so this may not be the case for construction deals at large: From what I've seen, usually a LTV of EBITDA. Recourse is waived only for the strongest borrowers and only under the most favorable terms. I don't see it happen very often, but I'm sure it happens more often with less risk averse lenders and those chasing larger spreads.
See my comment above for recourse details. The terms I quoted were for our project at 72% LTC. You will always have to put down completion guarantee and usually partial principal guarantee until stabilization at which point recourse burns off to standard bad boy carve outs.
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