CMBS conduit lenders are aggressively cutting loan spreads and loosening loan structure to win business amid a shortage of good-quality CMBS conduit loans. For the better part of a year, most CMBS conduit lenders are bidding low-leverage large loans at breakeven spreads in order be able to contribute more profitable smaller loans at wider spreads. One veteran CMBS lender commented recently, “The CMBS market has continued to perform and demand remains high for fixed rate loans. Particularly on lower leverage assets, we are closing loans well below our breakeven numbers in order to facilitate production of more profitable loans that have a bit more story/structure to them.”
Now lower loan spreads and looser structure can be obtained on small balance ($3 million-$15million) deals. “We recently had a client request we obtain CMBS conduit loan offers from our top three CMBS lending partners for the refinance of a top performing limited service hotel in a strong market. The loan request was $7 million/70% LTV with cash-out proceeds to the owner. All bankers bid the deal aggressively,” commented Michael Sneden, Executive Vice President at ValueXpress. “But then, upon learning they would not win, the bankers continuously rebid the spread downward 20 basis points, allowing us to secure a great rate for the client.”
“We are able to provide very attractive rates for our clients in this competitive lending environment because we maintain strong relationships with all the CMBS lenders,” commented Dennis Suh, Senior Vice President at ValueXpress. “We built these relationships by delivering $2.5 billion of quality CMBS conduit loans over 20 years. We bring the benefits of these long-term relationships to each of our clients, as demonstrated by the results mentioned above.”
To obtain competitive proposals for your next CMBS conduit loan, contact Mike Sneden at msneden@valuexpress.com or Dennis Suh at dsuh@valuexpress.com.