Stability of the Market and How that Affects Core

Wally Smith:
Okay. Who are the biggest lenders or the best lenders right now in this space?

Jeff Montgomery:
We mentioned Fanny, Freddie. Agency. They’re still active in the space right now. Bank’s been active. Life cos, there’s whispers, life companies. There’s whispers that they’ll be coming back in, Q1 next year.

Wally Smith:
Okay. And are the terms right now stable, or are they very much in flux?

Jeff Montgomery:
They’re in flux. We saw the 10-year go from, I believe, 4% into the 4s last week to this week… I looked today, and we’re at 3.77. The Treasury’s moving around. Spreads have been relatively stable. 150 to 170 basis point spread on that. But what’s hard on the acquisition side right now, with that instability from the Treasury side, is pegging. “I’m going to close this deal. I’m going to lock this deal up today. I’m going to close it in 60 days. Where’s my interest rate going to be? Where’s my interest rate going to be when I lock it?” So that’s actually what’s keeping a lot of the institutional investors on the sidelines right now, is yeah, “There’s too much turmoil on the market. We’re just going to wait.” So a lot of those groups have waited. And our most recent acquisition, that was the case, where it was the first time that interest rates started moving around. Institutions went to the sideline. We were able to capitalize on that and find a really good asset and not have to compete with a lot of the Blackstones of the world and larger institutions.

Wally Smith:
Yeah. How’s your LTV changing? Are you guys trying to have less debt in deals now? Or you considering doing any all-cash deals, or do you?

Jeff Montgomery:
Back on, we’re doing what the market’s asking for. So we have the flexibility as a company to go both ways. Lately, the DST market has been asking for higher LTVs, so we’re trying to target deals that have a higher LTV as needed. If the DST needed to go the other direction, we could go lower LTV. So it’s just more market-driven.

Wally Smith:
Very good.