Q3 Capital Markets Update
Market Pulse
Debt markets remain highly liquid, with nearly all lending sources actively quoting. Local and regional banks continue to lend into hospitality, offering rates in the low 6% range for well-positioned assets.
The Fed’s September rate cut lowered SOFR by 20–25 bps, giving some relief to bridge borrowers. Meanwhile, the 5-year Treasury yield has dropped 90 bps since January, a shift amplified by tightening credit spreads.
Financing Trends
Sub-$25M Deals: Activity remains strong, particularly in secondary and regional markets.
$25M+ Deals: Larger transactions remain more measured, though notable deals in top MSAs have seen quoted rates in the upper 5% range at 60% LTC—even from overseas investors.
The second half of 2025 also brought several sizable portfolio deals, momentum that is expected to carry into 2026.
Looking Ahead: Q4 Outlook
Lending in Q4 is expected to be modestly positive:
Small to mid-sized deals should continue to show strong momentum.
Larger transactions are gaining activity compared to earlier in 2025, though still approached cautiously.
Refinancing demand will grow, supported by recent rate cuts.
On the operating side, group and business travel remain key demand drivers, sustaining occupancy and ADR growth. However, inflation and rising costs will temper the pace of overall performance gains.
Select Q3 Closings
Marriott Longmont 3-Property Portfolio — Two conventional loans totaling $10.2M & one SBA 7a for $6.2M
Courtyard Memphis Collierville — $8.7M bridge loan
These closings underscore the continued demand for well-located, quality assets despite a shifting rate environment.