Capital Markets Activity Update - Q4 2020

PlattPointe has seen a rise in requests for multifamily construction. Both for-sale and for-rent new builds are sprouting up as developers opt for a more stable product type than office & retail given the economic turbulence of the past year. That said, funds are actively placing loans on all asset types, including hotels. Multifamily for-rent & for-sale new builds are coming in around 75%- 85% LTC, mid-to-high single-digit interest rates, non-recourse with a standard completion guaranty. Office, retail, and hospitality construction is maxing around 70% LTC with similar rates & covenants.

Inquiries for cash-out refinances on stabilized assets are becoming increasingly popular with property owners trying to capitalize on today’s rates. Bridge funds remain active with hundreds of millions that they are looking to deploy prior to year-end as well as Q1 of 2021.

EMERGING TRENDS

UNLEVERED FUND STIMULUS

Banks and debt funds with access to unlevered, balance sheet capital have ramped up over the past 60 days. In general, the number of lenders active in the market is still well below pre-COVID era levels but deals are getting done. While pricing is still 150-200 basis points higher than pre-COVID levels, we are starting to see price compression in the bridge lending market which is a good sign of competition.

HIGH LEVERAGE NON-RECOURSE CONSTRUCTION FINANCING

In addition, several funds are actively pursuing multifamily, AL/Senior Living, hospitality, and mixed-use construction projects. The timeline to close is anywhere from 30-60 days with a heavy concentration on those eligible for government take-out. This program is typically underwritten up to 75% LTC and priced at 8-8.5% interest rate with an exit fee if the borrower doesn’t roll into the pre-approved government-backed takeout loan.