Posted by: BayAreaComRE | March 10, 2010

Capital Markets Update – Week of March 10th

Cushman & Wakefield Sonnenblick Goldman is our investment banking arm, providing highly specialized debt structuring, debt and equity placement, hospitality financing and sales, note sales and associated advisory services. We get updates on their world often, here is the latest:

Capital continues to flow into real estate, with lenders and equity investors reporting greater desire/capacity to put money to work. Talk of a “liquidity bubble” may be overdone, as capital providers are still very focused on strong sponsors and major markets, but liquidity is certainly having a strong impact on certain markets and assets. For instance, class A multi-family assets are now routinely trading at cap. rates in the low- to mid-6’s, and we are hearing of a few deals trading inside of 6%.

Mezzanine lending spreads are finally starting to improve after nearly 24 months of seeing subordinate debt quotes in the range of 16-22%. Several new funds have come into the market and are looking at providing leverage up to 80-85% Loan-to-Value at target returns in the range of 10-14%.

Spreads have come in nearly 25 basis points during the past two weeks, with 10-year, Super-senior AAA bonds tightening to 430 basis points over the Treasury. The nearly continuous rally in AAA spreads over the past 3 months is being reflected in the enthusiasm of lenders for conduit loan product. Look for the first large multi-sponsor (large joint venture groups) securitization involving assets other than multi-family in the next 6-8 weeks. Every major bank is either formally back in the market underwriting deals or is in the process of hiring loan origination professionals. We expect the first pools to be “lumpy,” circa-$1B offerings featuring strong sponsors that allow bond investors to underwrite nearly every asset in the pool.

Thank you to Chris Moyer of Cushman & Wakefield Sonnenblick Goldman, for the update.

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  1. […] posts can be found here: March 10, Jan 26th, & December […]


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