1st QUARTER MARKET UPDATE
April 24, 2017
After a record year 2016, 2017 is off to a fast start and just seems to be getting busier. Our life companies are flush with funds and pricing aggressively, as are our CMBS, bridge and mezz sources. This is certainly great timing for borrowers anxious to lock rates in anticipating of additional rate hicks to come this year. Banks have come under pressure from the regulators to dial back commercial real estate lending, in particular construction lending and hospitality construction lending even more so. Frankly, I find this surprising considering vacancy rates are low for most product types and occupancy rates and RevPars for hotels are at record levels. That said, we have multiple banks which are continuing to lend on hospitality, albeit more conservatively.
We are seeing some amazing low spreads having lock rate last week with two of our life companies on a mobile home park at 3.69% (1.40 spread over the 10-year Treasury) with interest only payments the first five years, and 3.65% on a multi-tenant business park 10-years fixed and two years interest only offered on that loan. Expect the life companies to start becoming more selective this Summer as they achieve allocations early this year based on the high level of activity we are seeing.
I also have a nice value-add multifamily project under application for $23,150,000 at 77% of stabilized value and at Libor plus 5.25%.
Hospitality permanent financing is priced a bit higher, but readily available with our CMBS sources up to 70% LTV at spreads in the range of 225-260, and up to 80% LTV through a few sources with self-funded mezz for approximately 50 basis points more in spread. I've closed two hospitality loans this year, one construction loan and one refinancing.
LIFE COMPANY RATES 5-Year 10-Year
Multifamily * 3.37%-4.07% 3.60%-4.35%
Office, Industrial, Shopping Center and Self-Storage
3.47%-4.17% 3.65%-4.45%
*Our life companies are PAR to us, and we have been beating the agencies on interest rates. That situation will likely improve as the likelihood if the agencies are privatized under the new administration.
*Amortizations run up to 30 years depending on the age and condition of the property.
RECENT CLOSINGS
$24,000,000 124-ROOM HOTEL CONSTRUCTION LOAN
HEALDSBURG, CA / 66% LTC bank financing at Libor+400
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$15,700,000 109-ROOM BEST WESTERN PLUS RESORT HOTEL
SEASIDE, OREGON / CMBS Refinance
$27,000,000 168,263 SF RETAIL CENTER
WHITTIER, CA / Life Company Refinance
$10,200,000 55,456 SF OFFICE/RETAIL
DANA POINT, CA / Life Company Refinance
WHY WESTCAP?
WESTCAP is a founding member of Q10 Capital, which was formed in 1988, and is a network of 14 of the largest independent mortgage banking companies in the country with 22 offices throughout the United States, and a combined servicing portfolio in excess of $12 Billion. With a proprietary database sharing quotes, lender and equity intelligence we are constantly in a position to insure that we deliver the best sources at any given time for our clients.
WESTCAP serves as a correspondent to 15 life insurance companies for, which we service over $1.7 billion, and other sources of capital in order to meet all of our client's financing needs. Most of these correspondent relationships date back over 25 years, including Sun Life of Canada for which we have been the exclusive correspondent in Southern California for almost 30 years. We are handling assignments ranging from $1,000,000 to $400,000,000, and represent all sizes of borrowers including some of the largest developers in Southern California.
Call for rates on all income property types including hospitality, self-storage, student and senior housing. In addition to our life company sources, we have a long list of relationships with active CMBS, construction, bridge and mezz lenders and equity for all product types. We even have a couple of bank sources which offer no prepayment penalty and a few who offer non-recourse. With a few exceptions our permanent lending sources are PAR to us.
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