REIT Troubles Subside: CWSG Capital Markets Update

The REIT tsunami that struck the industry in late 2008 and continued into 2009 has officially subsided. During the past five months, the REIT industry has raised $20 billion of new debt and equity, and even companies whose very survival was in question are now raising unsecured debt at attractive pricing.

The REIT tsunami that struck the industry in late 2008 and continued into 2009 has officially subsided. During the past five months, the REIT industry has raised $20 billion of new debt and equity, and even companies whose very survival was in question are now raising unsecured debt at attractive pricing.

Click here to see Recent Debt and Equity Deals

During the last nine months, REIT unsecured debt has tightened from an average of 1,200 over Treasuries to 500 over Treasuries. The latest issuer was Brandywine, who raised $250M at 7.625% earlier this week.

We are seeing some tightening in mezzanine and subordinate loan spreads, with total pricing coming in from the high teens 60-90 days ago to the low- to mid-teens pricing today. That may not seem like much improvement, but it’s a critical first step if we’re going to get back to sensibly priced loans north of 60% LTV.

Fannie and Freddie’s domination of the multifamily market reached a new zenith in 2008, with the GSE’s accounting for 84% of all multifamily financings in 2008 versus 34% in 2006.

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