CMBS Lending Offers Increased Liquidity
- Apr 06, 2011
Investors are increasingly able to find financing for assets that need additional structure via the continued re-emergence of CMBS lenders.
Increased market liquidity, through the continued re-emergence of CMBS lenders, has strengthened investors’ ability to finance assets that need additional structure. CMBS lenders are comfortable with all major asset types as well as some specialty products given the right fundamentals.
With regard to non-core assets, JLL recently received competitive CMBS quotes on a single-tenant office deal and a fractured condo multi-family deal.
Strength of sponsor, tenant, length of lease term and location played an important part in the lender’s ability to competitively quote these deals. In addition, life insurance companies continue to aggressively quote lower leverage (equal to or below 65 percent) commercial real estate finance opportunities as the yields available in corporate bonds and other fixed-income markets continue to compress.
Current CMBS Loan structures are summarized below:
Eligible Assets: All asset types
Loan size: $5 million and up
Max LTV: 75 percent
Term: Typically 5, 7 or 10 year term
Amortization: 30-year amortization; interest-only is becoming more and more available
Type: Fixed or floating-rate
Pricing: 5-year 4.50 percent to 5.50 percent; 10-year 5.75 percent to 6.75 percent
MSA/Markets: Primarily major and secondary markets nationwide
Escrows: Required and dependent upon lease rollover
Recourse: Typically non-recourse with standard bad-boy carve-outs