We are closely monitoring the rapid and evolving situation with COVID-19 and its impact on our community, the local real estate, and the underlying capital markets.  Below is a short summary of what we are currently seeing in the fluid capital markets.  I know this information is secondary to the health and well-being of your family, friends, and community members, but we want to keep you informed during these unprecedented times.    


Insurance Companies

  • Corporate bond spreads significantly increased last week (~100 bps), and as a result, insurance company lenders are raising their coupon floors on commercial mortgages to compete with more liquid corporate bonds
  • Credit spreads are now irrelevant; most insurance company lenders are holding floors between 3.00-3.50%.  
  • Some lenders are breaking these floors for lower leverage (40-55% LTV) industrial and multi-family assets.
  • Coupon floors are expected to increase with widening corporate bond spreads.
  • A few insurance company lenders are currently out of the market this week and not quoting new business until the volatility settles.  



  • Most banks are trying to hold LIBOR floors at 1.00%
  • Several banks are holding to interest rate floors between 3.25-3.50%, given their cost of capital (sub-3% available through interest rate swap instruments).    
  • We expect to see banks start pushing back on non-recourse requests in this economic uncertainty.
  • We are starting to see banks slowly pull back in construction lending, and we’ll continue to see this if COVID-19 gets worse.  



  • CMBS and CLO/Bridge lenders are having a very hard time quoting new business right now, given that pricing is based on what investors will pay for the underlying/securitized bonds.
  • The lack of new bond issuances in the past two weeks has lenders in “pricing discovery” mode.  
  • Spreads increased by ~40 bps last week based on a recent securitization; 65% LTV, 10-year loans are still pricing around 3.25-3.50%, but that is expected to change with the volatility and bond buyer demand.  

As a local business with roots in the Denver community, we decided to temporarily close our office last week and practice safe social distancing, in order to do our part and help prevent the rapid growth of the virus.  In that same vein, we continue to be committed to our clients and we will continue to work remotely during this tumultuous time.  Each member of our team is set up to work from home, and we will continue to stay active in the capital markets during this transitional period.  Please feel free to reach out to us with any questions, needs, or concerns.