Current Market Snapshots

November 13, 2020

Accelerating Deal Flow and Robust Demand

November 2020

October was a strong start for the fourth quarter, with ~$190 million sold for four clients. Included were small balance performing loans, non-performing and “scratch-and-dent,” high-touch performing loans along with a handful of more sizable one-offs. The team stayed busy with pricing loans for prospective clients and processing assignments to bid in November and December. Much of this prospective and signed deal flow is hospitality and small balance commercial. This continues the trends we’ve discussed over the past several months. We have six client portfolios scheduled to bid in November totaling $166 million.

Banks of all sizes are entering the market with sales as small as $1 million to portfolios in excess of $100 million. Based on current data, bidding activity and results, we continue to offer most loans individually or in small pools. Doing so results in higher proceeds and increased seller and investor optionality. The seller can choose the desired combination of bids from vetted and accredited investors. Investors can bid on one, or multiple loans, individually or in bespoke pools, with their highest pricing. That approach increases the likelihood of successful bids. This could change, but in the current market, the sum total of individual and bespoke pool bids results in increased seller proceeds over the bulk bid.

Sometimes a new seller will ask, “With all of these sales, what happens if one is missed, and a deal doesn’t get any bids?” The answer is that it just doesn’t happen anymore because of the marketing reach and the technology and human resources involved in tracking investor interest and activity.

Let’s use the below as an example. This was a hospitality loan portfolio totaling ~$133 million. The metrics show incredibly strong investor interest across the portfolio. This was measured by both the number of NDAs executed per deal, and the number of individual investor groups that reviewed the underlying due diligence files in preparation for a potential bid. By tracking these numbers, DebtX traders always know if a particular deal lags behind and needs additional focus. This ensures that no deal falls through the cracks, and all get the proper marketing and investor coverage, resulting in the highest bids for each sale.

 

 

$97MM Performing Hotel Portfolio

$150MM Performing Hotel Portfolio

Asset Class: Hospitality
Location: Southeast, TX
Sale Structure: Individual loan offerings
Status: In Market
Seller: Bank

$9MM Assisted Living

Asset Class: Assisted Living
Location: TX
Sale Structure: Individual loan offering
Status: Closed
Seller: Bank

$51MM Assisted Living/Skilled Nursing

Asset Classes: ALF/SNF
Location: MO
Sale Structure: Individual loan offerings
Status: Closed
Seller: Bank

$62MM Hotel Small Bal. CRE & C&I

Asset Class: Various
Location: Various east coast
Sale Structure: Individual loan pool
Status: In Market
Seller: Bank

$21MM Hotel, Retail, Mixed-Use

Asset Class: Various
Location: Southeast
Sale Structure: Individual Loan Offering
Status: In Market
Seller: Bank

$5MM Small Balance NPL

Asset Class: Various
Location: SE, Mid-Atlantic
Sale Structure: Pool
Status: In Market
Seller: Bank

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