 |
| John Oharenko |
Chicago, IL – Summer realty finance conditions stay hot, with lenders scouring the markets for funding opportunities, according to The Real Estate Capital Institute® (RECI).
In addition to larger, institutional loans, funding sources
actively pursue smaller loans – typically ten million dollars or less.
Furthermore, deal flows remain strong because of low rates.
Important current underwriting terms for smaller loans are discussed as follows:
Property Types:
Various types of residential (e.g., multifamily, home rentals) and industrial
properties attract the most attention. Lodging, retail, and office
follow, with some types of credit enhancement often included, namely recourse.
Markets: Like larger loans, lenders prefer major metro areas, but many sources (mainly banks) focus on secondary areas. Funding pricing premiums of 25 to 50 basis points are standard for such smaller markets.
Pricing:
Smaller ten-year loans typically fall within the 200-to-250-basis-point range
for conventional property types. Properties underwritten to 1.25X+ debt
service coverage and 65% or less loan-to-value attract the low end of the rate
range. Other commercial properties capture rates of 3.5% to 4.5%,
reflecting a wide range of underwriting variance.
The Director at The Real Estate Capital
Institute®, John Oharenko, advises, "Small loans are the lifeblood
of lending for most communities. Local lenders, especially banks and
credit unions, offer the most competitive terms."
The
Real Estate Capital Institute® is a volunteer-based research organization that
tracks realty rates data for debt and equity yields. The Institute posts
daily and historical benchmark rates, including
treasuries, bank prime, and LIBOR.
CONTACT:
John Oharenko
john.oharenko@reci.com
Executive Director
director@reci.com / www.reci.com
No comments:
Post a Comment