State of the Market | November 2020

Terrydale Capital is actively providing capital solutions to our clients. We are in constant discussions with our capital market resources and are also identifying new resources that have become more active in this new environment.

A quick snapshot of what we are seeing in the November’s State of Market:

Private Money:  Rate Range of 6% – 14%

Very active. We are seeing a number of firms organizing loans but have been requiring more equity. Rates have a very wide range depending on the closing timeframe, loan size, location, sponsors, and current performance.

Debt Funds & Bridge Lenders:  Rate Range of 3.50% – 12%

Most debt funds that are staying in business are in business and lending. Larger firms focused on transactions above $10MM and stabilized are competing with Commercial Banks and institutional capital again. In the last three months, we’ve seen a trickling in of firms lining up funds to put out money. On non-stabilized transactions, we are seeing the bridge start around 4.75%.

CMBS:  Rate Range of 3.95 – 5.00%

CMBS is back. This sector has slowly picked up steam since July. We are seeing them find a way to offer opportunities that clients are seeking non-recourse and max LTV. They’re primarily competing in the Retail, Industrial, and Multi-Family space.

Banks:  Rate Range of 3.10% – 5.50%

Banks have been pushing rates down to compete on quality transactions. Leverage is still lower than where it has been historically and usually sees quotes in the 65% +/- range. Commercial Banks are working with fewer staff and staff working from home still which has continued to see delays in closing processes.

Credit Unions:  Rate Range of 3.25% – 5.00%

CU’s have become very active and aggressive on quoting. They, like commercial banks, have been dealing with challenges to process loans timely due to covet-related challenges.

Fannie & Freddie:  Rate Range of 2.65% – 4.50%

Agencies are back in the market and pushing a lot of volumes right now. Loans above $10MM with lower leverage are seeing very aggressive rates. We will likely see spreads starting to increase and expect this to happen until guidance from the government comes out with regard to funding. This space is still holding back Covid reserves which allow some other financing alternatives to gain traction where otherwise the borrower(s) would have stuck with Agency.

FHA:  Rate Range of 2.25% – 4.35%

Still very active and allows the most competitive structures. These loans will take a minimum of 4-6 months and will require additional costs we are seeing long-term investors move to this space to take advantage of the program.

Life Company:  Rate Range of 2.30% – 4.5%

Life Co. is also very much back in the commercial lending space. Leverage and options are closer to where we saw them pre-Covid. Like Agency we are seeing some holdbacks for Covid on a deal-by-deal basis.

Equity:  

Many private firms are being more creative today to get deals done and with a lot of money sitting on hold that was anticipated to be allocated in 2020, we are seeing more and more activity from Equity firms.

Brian Gramlich
Terrydale Capital, LLC
O: 214.241.4230 x 101
5740 Prospect Ave, Ste 3001
Dallas, TX 75206
bg@terrydalecapital.com