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Back to Aggression
Cushman & Wakefield Sonnenblick Goldman EVP/principal Douglas Hercher
Six months ago, lenders were quoting aggressively only on deals for really strong properties in major markets, Cushman & Wakefield Sonnenblick Goldman EVP/principal Douglas Hercher told our Dallas reporter. Today, he continues to be surprised and pleased at the level of debt financing that is available and the aggressive nature of the lenders. He's now seeing active lending interest across a much broader swath of the market, including secondary properties in non-gateway markets. A year ago, he says, he couldn't imagine that there would be debt quotes under 5% in the foreseeable future for office, retail or industrial assets, and now he's seeing that fairly routinely—including several recent C&WSG deals pricing around 4% for fixed-rate financing.
New York Times Building, New York, NY
A sign that life companies have a lot of money to put to work is their interest in real estate as a relatively safe investment asset class on a risk-adjusted basis. With 10-year treasuries hovering around 2.5% and high-grade corporates having tightened in the past year, lending spreads look pretty compelling, especially at lower LTV and valuation levels. Douglas says many off-shore lenders are coming back into the market. Asian lenders have been quite aggressive, including major Chinese banks that are relatively new to the US market. For example: the $120M financing of the New York Times building with the Bank of China that C&WSG completed. “These are lenders that can write big checks, $200M to $400M at a clip, in places like San Francisco, DC, New York and Boston,” he says. He expects that this will continue to create competition in the top markets and will help push lending capital deeper into the market.
Related Topics: New York Times, Douglas Hercher