Q4 Capital Markets Update
Deal Volume Accelerates
Low rates and excess lender liquidity has helped fuel the highest pace in commercial real estate volume in 16 years. Multifamily has captured 35% of the volume this last month with valuations up over 10% since last year. Strong lender appetite with aggressive rates have fueled this surge in valuations, particularly in growth markets like Dallas, Austin, Atlanta, and Nashville. The central business district office index is down 4.5% last quarter from a year ago. The suburban office price index jumped over 10%, showing expectations of employer movement away from city centers. CMBS delinquencies are down to 2.50%, with retail having the highest (4.07%) and lodging the lowest (1.54%). Lenders remain focused on tenant credit and collections history.
Rate and Economic Indicators
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10 Year Treasury up to 1.57% from 1.19% at the start of August: Bloomberg rates team forecasts 1.58% by end of 2021 and 1.95% by the end of 2022.
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LIBOR and SOFR flat at 0.08% & 0.05%: 1 & 2-Year LIBOR Forwards at 0.25% and 0.70%, down from last quarter expectations
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Core PCE (the Fed's preferred measure of inflation) came in at 3.6%: Oil Prices at 7-Year high at $80/barrel
Recent Financings
Industrial Business Park
Nevada City, CA
$4 Million Bridge Financing
Private Investment Fund
2 Year Term, 6-Month Min Interest
Full-Term Interest-Only
Webster University Columbia, SC
70% LTV Acquisition Financing
Credit Union execution
7-Year Fixed Rate
5-Year remaining lease term
Rates
Fannie Mae & Freddie Mac continue to reward affordable deals with 10-40 basis point discounts in rates.
Life Companies are filling up for the year, but continue to price aggressively for well-located, newer product.
Banks and Credit Unions remain competitive for smaller balance, shorter 3 - 7 year terms, with some new full-term interest-only programs for select multifamily.
Construction Lenders are adding extra construction budget contingencies with the recent volatility in materials and labor costs. A strong Sponsorship and GC track-record is critical to securing competitive financing terms.
Lender
Max LTV
Rates
Closing
Notes
Fannie/Freddie
10-Year Fixed
80%
2.60% - 3.05%
45-60 days
LTV & DSCR dependent
Fannie/Freddie
10-Year Floating
75%
2.25% - 2.50%
45-60 days
LTV & DSCR dependent
FHA Refinance
35-Year Fixed
85%
2.75% - 3.20%
120-150 days
includes MIP
Life Insurance
Companies
75%
2.50% - 3.25%
40-50 days
DY dependent
CMBS, Bank, &
Credit Union
75%
2.95% - 3.65%
45-70 days
DY & term
dependent
Bridge
Debt Funds
80%
3.0% - 5.25% +
14-45 days
LTC & stabilized DY dependent
Construction
Lenders
80%
3.25% - 4.75%
45-60 days
LTC & size
dependent
Multifamily Loans In-Progress
Lender: Debt Fund
393 Units in Texas
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$26 Million Bridge Loan
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$1.8 Million CAPEX funding
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78% LTC, non-recourse
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3.35% rate - 0.25% Libor Floor
Lender: Regional Bank
33 Units in Oregon
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$3.51 Million Cash-Out Refinance
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3.25% fixed rate
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65% LTV, non-recourse
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3-Years Interest-Only, 7-Year Fixed Term
Lender: Local Credit Union
30 Units in Oregon
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$1.85 Million Cash-Out Refinance
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2.89% fixed rate
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65% LTV, recourse
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10-Year Fixed Term with 5-Year re-set
Tim Gerlach, CPA | Principal
CPA Lic. 130463 | Broker Lic. 02038912