Heavy Volume Met With High Demand

September 2020

August was an extraordinarily busy month. Loan pricing volume exploded, and we bid $185MM throughout the month. Eight separate clients were represented in these sales and 38 of 42 sale offerings closed, resulting in a trade rate of 90.5%. This is a fantastic number well above the market rate. We expect increasing volatility in this area, especially with such a heavy slate of hospitality on the calendar. As we’ve noted in previous Snapshots, we’re executing exposure reduction strategies, where the objective is to selectively trim exposure within a pre-defined budget.

Key Highlights

Although busy, the market has remained relatively stable. The month was notable for the continuation of existing trends rather than big positive or negative surprises. Trends discussed in prior snapshots include:

  1. Pricing smashed expectations, exceeded the reserve price by 25%! We attribute this in part to continuing demand-supply imbalance in the small balance commercial credit secondary market.
  2. Strong investor interest. 167 investor NDA’s executed to view the portfolio, and 12 final bids. Note that a final bid is just that, final, due diligence completed with no contingencies.
  3. Strong bids across the field. This was perhaps the most encouraging statistic. A majority exceeded reserve and any one of the top five would have been deemed an eye-popping number.

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