Capital Markets Activity Update - Q1 2021
Hotel and MF Conversions Sweep Through the Market
As more and more property owners attempt to weather the lasting storms of COVID, we have seen several hotel properties go up for sale with prospective buyers seeking to acquire and convert them into more traditional multifamily properties.
Lenders, on the other hand, are starting to see this shift and allocate more capital for these conversions. These bridge lending scenarios are becoming more common as we see the aftermath of risky business models that were partially completed throughout 2020. These buckets of capital, as well as those for traditional multifamily for sale and for rent development, are plentiful as ever. Traditional hotel lending is still slow to recover, with many lenders citing competing asset types as a more stable investment as the economy for travel slowly springs back to life.
Fuse for Refinances is Becoming Shorter
If you have not refinanced your property in the past year, it may be your last opportunity to take advantage of the notably low rates originally established as a precautionary economic
measure in 2020. The 10-year U.S. Treasury yield briefly topped the 1.6% level last week, meaning yields are up over 70 bps this year and trading at the highest level in over a year. A sign of economic optimism but also raising concern for investors across asset classes fearing this jump could be driven by inflation instead of economic recovery.
Many bankers are currently facing a massive influx of refinance requests as interest rates rise. PlattPointe Capital offers competitive fixed term rates, cash-out and limited recourse in certain situations. Reach out to an advisor today to discuss your options.
Projects Quoted This Week
$35M multifamily for rent construction project located in Texas. PlattPointe received multiple quotes from private debt funds and family offices, ultimately pushing into underwriting with an offer at 80% LTC, 7.5% interest, non-recourse.
$8.5M hotel acquisition located in Colorado. PlattPointe shopped the deal with local groups who would be competitive at a lower leverage, lower rate offer given the needs laid out by the sponsor. This ultimately came in at 65% LTV, 4.12% Interest, 5-10-year term, 25-year amortization.
$22M multifamily for-sale construction project located in Florida. PlattPointe was approached by a sponsor who needed a higher-leverage offer to free up their initial cash position as well as retain a larger percentage of their sale profits on the backend. PlattPointe found an A/B piece loan that stretched leverage up to 87% LTC, 9.1% blended interest rate, with a recourse provision that burns off as pre-sales materialize, and risk gets chipped away.
