Non-Recourse Money Returns
Banks are finally opening the vaults (Finally! We left a sweater in there in 2008) to compete with CMBS and life companies for new loans. That’s just one reason we’re excited to bring our DFW Capital Markets Summit to you on Aug. 27 at the Highland Dallas hotel (formerly The Hotel Palomar).
JLL EVP Jason Piering tells us banks are now providing non-recourse financing up to 65% LTV. That's because they're seeking to gain market share among other term lenders. To counter this new policy from banks, CMBS is now providing up to five years interest-only on full leverage loans, 75% LTC, and full-term interest only on lower leverage-loans below 55% LTV, Jason tells us. Early on in CMBS 2.0, no interest-only was available, then one- to three-years interest-only became available, and now increasing the interest-only periods are the norm, he says.
There’s a lot of capital in the market chasing a minimal amount of product. This phenomenom is creating the need for lenders to offer more aggressive loan terms in order to win the bidding war, Jason says. Additionally, the limited product supply has also driven cap rates lower. That, coupled with an abundance of capital is creating ample competition, which is keeping lender spread pricing low (equating to lower interest rates). To learn more, join us for our DFW Capital Markets Summit on Aug. 27.
