This article and podcast from John B. Levy is a few days old, but it really makes a great point in my opinion. He says that lenders are finding the right mix and that is what is causing an increase in loan activity, including even some CMBS loans. Yes, the LTVs are low and the rates may be -- well, they are what they are -- but there is activity.
My take? Time heals most wounds. No matter how much private or public intervention there may be (TALF, schmalf), lenders and buyers had to sort through this whole market and find a middle. There are signs that the middle is actually being found in a few deals, and you are finding deals with mezz debt and equity replacement coming in to make up for lower LTV loans and reduced equity in properties.
I also agree with the conclusion that we are nowhere near from being out of the woods. Banks are still having problems, especially at the community level. We've gone from a dead stop to some movement. Full steam ahead? Not yet. But to continue the maritime analogy, the steam is hopefully building so speed can be increased. I just hope we do not go back to the flank speed we were at a few years ago for the rest of my career. We've seen that and hopefully learned our lessons. The cowboy mentality that I sometimes saw at the the height of the market was just no fun, at least not for this dirt lawyer.
So what next? We watch and we negotiate and we see what I think will be some complex deals go down. They ought to be interesting to watch and, in hopefully a few cases, to participate in them. And of course this will be a market by market recovery. Don't just expect the spigot to open this morning. Phones ringing and emails flying are always my first clue. And that will be a welcome sight and sound for most of us.