The CRED iQ research team in its focus on reviewing underwriting of the latest market transactions wanted to further understand the key loan metrics across this universe to get a real-time sense of the new issuance marketplace.
CRED iQ analyzed underwriting metrics for the latest eight CMBS conduit transactions. We reviewed 500 properties associated with 302 new loans totaling $6.4 billion in loan value that all originated within the past four months. Our analysis examined interest rates, loan-to-values (LTVs), debt service coverage ratios (DSCRs), net cash flow, debt yields and cap rates. We further broke down these statistics to show a minimum, maximum and average for each metric and by property type.
Office
In total, 41 properties (of the 500 total in our analysis) were secured by office assets, comprising a total loan balance of $673.5 million. Average interest rates were 7.5 percent and ranged from 6.9 percent to 8.3 percent. Cap rates ranged from 5.5 percent to 9.3 percent and had an average of 7.1 percent for the office sector. Debt yields and DSCRs averaged 13.3 percent and 1.54 percent, respectively. Office LTVs were 54.2 percent on average.
By loan value, retail was the most popular asset type with $2.3 billion and 128 properties in total were secured by retail properties. Interest rates ranged from 6.2 percent to 9 percent with an average of 7.2 percent. Cap rates ranged from 4.8 percent to 12.3 percent with an average of 6.7 percent for the retail sector. The average debt yield was 15.2 percent. The average DSCR of 2.06 was the highest of any sector, while the LTV of 45.5 percent was the lowest.
Hotels had the highest average interest rate (7.7 percent), cap rate (8.1 percent), and debt yield (17.1 percent) across the sectors.
Manufactured housing represented the smallest property type with only 12 properties backing $59.9 million. Self-storage properties had the lowest average cap rate at 5.8 percent.
Robert Khodadadian has long had a simple philosophy about selling real estate. The way he sees it, there are approximately a million buildings in the city, and the broker that gets to sell any one among the multitude that will hit the auctioning block at a given moment is, sometimes, simply the person who happens to pitch their services to the right seller at the right time.
Robert Khodadadian, skyline properties, ground leases, off market, investment sales, Commercial Real Estate, Commercial Observer
Read MoreChannel, CMBS, Finance, Mike Haas, National, CRED iQ Commercial Observer
