Los Angeles – August 31, 2017 – According to RCLCO’s Q2 2017 Chartbook, capital for real estate debt and equity are still considered abundant. For equity, there is plenty of “dry powder,” but fundraising may be moderating. Foreign capital transactions are close to the pace set in 2016. Overall, 2017 real estate transactions are tracking closely to that of 2016. Debt markets remain active with the net percent of banks tightening lending standards relatively flat. Although still dominated by the banks and GSE’s, the marketplace has seen a rise in non-bank lenders filling the gaps for capital in the marketplace for construction loans, heavy transitional properties, etc.
Is the retail sector an opportunity? Included below are several articles that discuss the current and future retail environment. CorAmerica continues to evaluate new opportunities in this transitioning sector of the real estate marketplace.
The first half of August was relatively busy with 4 new conduit deals pricing for $3.86b, bringing the YTD total to $28.1b across 30 deals. Pricing for the LCF AAA ranged from S+90-95, AA- ranged from S+140-160, and A- ranged from S+170-202. Given the significant demand for bonds in the secondary market, the weaker new issue prints and variance across deal pricing levels were a little surprising. With lower rates, investors seemed to be less inclined to pay up for risk retention deals that did not appear to be superior in credit versus wider trading names in secondary. In SASB space, 8 deals priced this month. There were 6 floating rate deals ($4.64b) and 2 fixed rate deals ($827mm) for a total of $5.5b. Similar to last month, several of the SASB deals were at least partially preplaced, including the $1.97b floating rate Motel 6 deal that was entirely pre-placed. Trading volumes in the secondary market were extremely low in the last two weeks of the month. On the month, AAA and AS/AM bonds were quoted flat to a touch tighter, AA- and A- were quoted flat to a few bps wider, while BBB-was quoted about 10-15bps wider. In addition, bonds with higher than average Houston exposure ended the month wider, as investors await more news about the potential impacts of the storm. September is expected to be a very busy month on the new issue front, as issuance was basically shut down for the second half of August.
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