Where is CUNA Mutual currently winning deals?
Peter: We are winning deals based on three factors: Competitive rates, flexible pre-pay, and lower leverage products. Our competitive rates have been in the low to high 3% range, depending on the loan to value and the duration, but pretty much we've been generally very competitive.
We've also been able to win deals due to our flexibility, including our flexible pre-pay, and offer many terms to help borrowers out in their unique situations. So I think the flexibility of process is important in our business.
We've been seeing a significant amount of lower leverage products and borrowers looking for interest-only so we've been able to do long-term, interest-only deals that are very low leverage but it is an attractive product for certain borrowers. I'd say a combination of these three factors are the main reasons why borrowers are choosing us.
Where do you see the market and interest rates going in the next few years?
As far as the market goes, I think we still view most market fundamentals as being fairly strong and robust. Certain valuations have gone very high. We certainly didn't see this happening as we've probably been calling for it to slow down for a number of years now but it keeps going. Yet, for the most part, you're seeing fairly big discipline in the market from lenders. We see the market slowing down in the next 12-18 months but don't see the bottom falling out so we are going to continue to focus on markets we see favorably and pick and choose where we want to go.
As far as interest rates, we don't know really as nobody saw the fall off of the treasury in the
last 9-12 months so that's been a huge factor. We probably do not see the rates up in an appreciable amount very soon but our hope from a lending standpoint would be that they incrementally go up.
What are some asset types that have been closed at your office this past year?
We've done all types but lately, we've done some industrial, multi-family, self-storage, single-tenant, manufactured housing, student housing, parking garages, etc. These asset types are in good locations, are good real estate, have a great history and encompass the kind of assets that we'll go after. In one instance we provided a 30/30 fully amortizing loan with 15 years of interest-only, which is unusual for us but they were
strong assets and therefore getting the business that we want to get done.
What are some of CUNA's numbers from 2018, production level in 2019, and goal for 2020?
In 2018, our production was $425 million. We will have a better year in 2019 in total production as we will reach closer to $500 million on average deal sizes of around $9 million, which represent I'd say around 50-60 loans we will have completed by the end of this year. On appraised loan to values, we're still somewhere south of 55% LTV from an appraisal basis so it's still low leverage and have been able to increase production this year which is great. For 2020, we'd like to be north of $500 million as the company is growing and the
demand for our asset class is still there.
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