Yesterday I spent an hour on a conference call with a national lender that is putting their money where there mouth is and has started to actively quote on income producing commercial real estate loans to be aggregated for a pool targeted to be securitized in Summer 2010.

Here are some of my notes on what Non-TALF CMBS will look like:

  • targeting stabilized assets in 5 major food groups
  • looking to keep things really clean (especially on the first securitization)
  • the loans will be primarily non-recourse
  • willing to get real creative for deals / sponsors they really like
  • been quoting deals from $5+ million
  • 5-10 year term
  • Amo: 25-30
  • Coupon: 6-6.5 for 5-years and 6.25-6.75 for 10-year money
  • lender is getting half point fee
  • sized to 11-12% debt yield
  • major markets with some secondary markets
  • non-recourse with some 25% recourse on special situations (large cash-out)

Also have a portfolio product:

  • portfolio 9-9.5% debt yield… might go to 9% if 20 year amo
  • Portfolio deals over $5mm
  • do credit check & litigation checks
  • want to understand the sponsor’s global real estate portfolio including debt maturities and cash flows
  • serious lenders with a balance sheet plan to retain the B-piece… market feedback is that there is no B-piece buyer support for loans under $10mm
  • Do bridge value add on multi-family because they can not compete with the Agencies (Fannie, Freddie & FHA)
  • Pre-payment penalty: they think defeasence with be the way it starts with possible yield maintenance option down the road
  • How do they work with brokers?: lender charges a half point when working with brokers – no more par loans
  • Lock box is likely required on $25mm and above not in the $5-20 mm range
  • Will do cash out deals for sponsors they like… if a lot of cash out will ask for partial recourse
  • Target initial pool to securitize is $400-500 mm
  • Will consider hospitality for clean, low leverage, good history properties
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