Market Update: Recent Triumphs and Pricing Trends

Latest Rate Pricing from Aline Capital??

With the latest (and hopefully the last) rate hike from the Fed, we thought it would be beneficial to share where debt is pricing across the various buckets of money in the market. We at Aline are daily participants in the market and want to give an open and honest view of where we are today.??

Agencies – We are seeing the Agencies price deals anywhere from the mid 5% - low 6% range, pending a few factors. The key driver of this is affordability – discounts for “Affordable” rents can be up to 40 bps, which is obviously substantial. The other thing to note is that affordable deals that are sub 65% LTV can potentially get a 35-year am, which really helps get more loan dollars (simple math, right?). Fannie seems to be the most aggressive in using the longer am as a tool in their belt. It seems reasonably priced deals command 60% - 65% LTV unless there is some story to the transaction.??

Perm Lenders / LifoCos – The low-cost groups are still pricing in the low 200 bp range over the near-term index. Leverage is low, but that pricing is pretty good as it’s in the mid-5 % range as I write this. Appetite is pretty limited to multifamily and industrial, with some grocery-anchored retail with term getting good looks.??

Banks / Credit Unions – The best pricing we have seen as of late is in the mid-6% range, with a couple of smaller banks getting below that. That is the outlier however as most banks are in the 7% - 8% range. Contrary to what you see in the headlines, banking volatility started last year, with a lot of banks having gone to the sidelines before the turn of the year. It wasn’t just the recent stress that caused some failures. However, the banks that are still lending are “taking care of their own.” The best way to get a loan is to bring a load of deposits over, which can allow a bank to get a little more aggressive and make a deal pencil.??

We continue to monitor this as volatility in the banking world is very high. We continue to get updates from our sources and make sure we find banks and credit unions that can offer certainty of execution.??

CMBS – Still the most effective execution for office deals, though you have to pay to play. Spreads for office deals are in the high 300 – low 400 range, while we have seen them down to 300 over or lower for other asset classes. We recently received a quote at 70% LTV, which was a pretty exciting opportunity for us as it’s the first in some time that started with a 7.??

Bridge Debt – Is expensive. Any deal requiring significant value-add is still going to price in the 8.0%+ range. However, we have seen some lighter value-add bridge products price in the mid-hi 6% range. The market is actively trying to solve for bridge execution - bringing a lower-cost product that allows Borrowers the ability to add value while not hamstringing them with a high rate. There will be more movement in this space and we continue to keep in touch with our sources to make sure we can offer the most competitive pricing.??

In a hard time to get a deal done, Aline Capital is continuing to use its expertise and relationships in the space to creatively add value. If you have any questions on a deal or where something may price in the capital markets, please reach out to JD Lehman at (843) 473 - 9631 or?jdlehman@alinecapital.com??