PLUM Lending and the Current US Economic Outlook
The US Economy was Tentative going into 2020:
- Earnings growth going into 2020 was soft prior to the COVID-19 shock. Corporate earnings grew YoY in 2018 at 22.7% and then slowed to 1.1% growth in 2019 .
- With the almost certain further decline in GDP as countries, cities and conference venues are locked down, even the most optimistic Wall Street analysts are projecting at least a 50% probability of recession.
- Corporate debt at record levels combined with the escalating trade war tensions and one-off issues such as the 737 MAX grounding, were already weighing on US GDP growth.
- JetBlue recently reported that the demand for flights has fallen more due to coronavirus than after 9/11, and the CEO of Southwest has also admitted that this has a “9/11 feel to it” when discussing the double digit decline in seat demand.
Impact to the availability of CRE financing:
- Inevitable decline in revenue and growth, particularly in hospitality and retail centers has many lenders retreating from these asset classes.
- Supply chain disruption, travel, steel production down 90%, auto sales down 95%.
- CMBS and securitized lending products are trading at substantially increased risk premiums, equivalent to early stages of the 2008 great financial crisis.
We're here for you:
- Collectively, we are facing a public health crisis and our hearts are with all of those affected by the novel coronavirus.
- Despite the challenging environment, PLUM recognizes that its clients have loan maturities and we are prepared to fill the void in liquidity with our balance sheet loan offerings.
- As a result of our institutional ownership and additional recent allocation of capital from insurance companies, we are actively seeking investment opportunities for their funds.
- PLUM’s stable balance sheet offerings are not impacted by the lack of liquidity in the capital markets, and continue to be available at attractive rates. Our capabilities allow us to offer a special book of capital by negative market trends.
For information on how your immediate financing needs may be met, contact a PLUM expert.
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