by Derek Ezovski
October 25, 2010 03:36 P
I recently attended a local real estate seminar that was intended to explain the state of the market from lenders' points of view. It consisted of a panel with the following participants: Citibank, Farmington Bank, CB Richard Ellis, Freddie Mac and and insurance company lender, HIMCO. This blog is just to highlight some of the major points raised...feel free to comment.
- Good deals still have large demand;
- CMBS is slowly on the rise - cautious right now but clearly on its way back;
- Rates are making the spreads tough for real estate lenders;
- Farmington Bank (the only community bank involved) actually grew by $600M over the past 2 years;
- Freddie Mac noted much more activity on the sales side this year;
- There is now an increased focus on secondary and tertiary cities due to the overabundance of bidders in MSA's;
- CMBS deals are much lower leveraged than previously. Most recent CMBS deal was only 55% leveraged.
- According to CBRE, the multifamily biz is booming, especially since debt is available (primarily via Freddie & Fannie);
- The debt/yield ratio is quickly becoming the new LTV for lenders;
- The lenders were actually surprised that more bankruptcies have not occurred over the past 2 years;
- FDIC is now requiring lenders to maintain a 5% piece into the CMBS deals that they are participating in;
- Freddie Mac is currently underwriting/funding 90% of all single family deals and 80% of all multifamily deals nationwide.
- There are currently 18 CMBS players in the market today, although only 3 or 4 have executed deals this year.
For many, this is new news. For many, this is nothing new. Either way, I wanted to share it with you all. While the market is slowly coming back, it is being funded via lenders who want to do deals but the deals just haven't made sense in many ways. I will keep you posted in my discussions.