As the snow blankets Philadelphia and most of the Northeastern US, I begin the week with some meditations on the markets, debt and otherwise.
Multifamily and Industrial assets continue to garner most of the attention and funding throughout the country. Freddie and Fannie multifamily rates remain near historic lows, with SBL 10-year rates hovering around 3.5% without affordability discounts, and about 40BPS lower with them. That's for loans under $7MM. Larger loans can get up to 60BPS lower, depending on structure and term. There is still plenty of capital available from local, regional banks and non-bank lenders for these assets. We are also seeing well-located construction loans booked at 75% LTC, in. line with pre-COVID levels. Strong sponsorship is key in obtaining the best terms.
Retail, only essential, is also strong, primarily net-leased properties with credit tenants. Strong grocery-anchored centers are getting attention too. We have seen rates in the high 2's for long-term net-leases in the Northeast, from some of the more aggressive bank lenders. Recourse is generally required, however, we've quoted CVS non-recourse at 65% LTV on a 10+ year lease. Non-recourse lenders are lending in the mid 3's to low 4's, depending on tenant, leverage and lease term.
Life Sciences There is accelerating interest in healthcare properties as well, and especially demand for "wet" lab and technology space used by the biopharmaceutical and life sciences groups, like Wexford Science & Technology, University Place and Brian O' Neill's MPL Ventures Discovery Labs. Witness December's majority purchase by Cantor Fitzgerald and Silverstein Partners of University Place 3.0, for $56MM. Competition for this deal was fierce. Probably didn't hurt that it was in a QOZ as well.
Especially in the Philadelphia market, this asset class is heating up and, with more than 1MM square feet in development, may finally provide Philly with its own bragging rights alongside Boston and San Francisco. Penn termed this area Cellicon Valley, where cell and gene therapy techniques were invented. Last month alone, O' Neill bought the old Inquirer printing plant next to Discovery Labs and bought out his partners in Discovery, giving him control of more than 2.3MM square feet of this burgeoning life sciences campus in the Philadelphia suburbs. Leasing activity is brisk, with the biopharmas gobbling up space as soon as it comes available for their cell and gene therapy activities, now so much more urgent in the era of COVID.
That's it for this week. Stay well, take care of each other, and keep the faith, any faith. It helps.
Contact us with any of your debt-related inquiries. We are scheduling complimentary debt assessment calls, where we can quickly assess your current debt and let you know if there is better debt in the market today. It's quick, easy, and just might save you a lot of money.