Tuesday, February 9, 2010

Update from the MBA Conference in San Diego

2.9.10

Life company's lent $12B last year and have $30B for this year. Everyone will be fighting for the same type of conservative deal so expect spread compression. Some life companies will need to get creative to get out their money. 10 yr money ranges from 5.75% to 6.50%. Lender's are very anxious about tenant rollover.

Investors don't have good places to put their money so there's a strong interest in CMBS coupled with the perception that we are at or near the bottom. Take your cash flow after reserves and cap at a debt yield of 10 to 12% and that's your loan amount (min loan amount of $10M) with a rate of 6.50 to 7.50% 10/30, non-recourse with all the annoying bells & whistles. This program will continue to evolve quickly provided new security pools continue to be well received by investors.

Banks hold the lion share of the debt maturing in the next few years.