Cushman & Wakefield has published their Equity, Debt and Structured Finance Capital Markets Update for April 2013. Market highlights include the following:
- Defeasance of CMBS loans increased 21% in 2012 to $5.9 billion from $4.9 billion in 2011. Most of the loans that defeased were originated between 2003 and 2005. With interest rates lower in 2012, defeasance costs were higher for borrowers, but the interests rates for new mortgages were lower which offset the difference in most cases. C&W EDSF has completed several refinancing for loans with 1 – 3 years of term remaining and have been able to show significant savings through early prepayment. Please contact any of our offices to discuss.
- Real Capital Analytics reported this week that year-to-date investment sales activity as of the end of February was up 63% on a year-over-year basis. The total volume for February was $29.6 billion and includes the sale of the former Archstone apartment properties to two different REITs in transactions that are among the largest since the recession.
- Several non-bank lenders have recently launched more robust floating rate senior loan programs, most likely with the intent to capitalize on the securitization market and the expectation of more floating rate loan pools in 2013. Along with the continued expectation that interest rates will begin to rise over the next few years, these loans are more attractive to many lenders than longer term loans that will pay around 4% for the next ten years. Pricing is in the L + 300 – 400 range, and LTV can go as high as 80%. Expect many of these lenders to look to carve off an attractive floating rate mezz piece to hold or sell.
- $21.3 billion of CMBS deals have priced year-to-date compared to $5.8 billion for the same period last year. $9.5 billion of single borrower CMBS deals on property types including malls, hotels, and office buildings are included in the total.