JetLoan Capital – 2nd Quarter 2017 Newsletter

JetLoan Capital – 2nd Quarter 2017 Newsletter

The Dynamic Aircraft Lending Landscape

The banking industry has changed substantially over the years. Fifty years ago, there were over 14,000 banks in the United States. Today there are just over 5,000 banks in the U.S. Because of the financial risis of 2008, an extended period of historic low interest rates, Dodd Frank, and other factors, new banks openings are at a low. The largest banks have grown even larger since the financial crisis. Today the top 10 U.S. Banks hold over 10 trillion dollars in assets. There are over 1,700 U.S. banks with assets over $300 million.

Aircraft Lender Overview

  • Types of funding sources include; banks, credit unions, leasing companies, private equity and other
  • Lenders are focusing on different niches by aircraft types, pistons, turboprops, light jets, mid-size jets, to large cabin jets
  • Lenders also have preferences when it comes to the client’s industry, client geographic location, corporate vs high net worth individual, aircraft type, aircraft age, aircraft usage, domestic U.S. and regional U.S.
  • New lenders are entertaining the aircraft market and there has been a lot of turnover and other changes at “traditional” lenders
  • Many of these “new” lenders are “aircraft savvy”, competitive and responsive

Why Lenders Are Entering The Market

  • Many relatively large U.S. lenders are looking to grow assets
  • Many are too concentrated in real estate
  • Aircraft loans are bigger than most equipment loans like construction, trucking etc.
  • Aircraft have a long useful life, and historically relatively good residual values
  • Clients that own aircraft are affluent leading to other bank “cross selling” opportunities like business banking and wealth management

Take-Aways

  • Fewer aircraft borrowers and more aircraft lenders mean competition for loans
  • There is a very wide range of financing available for almost any type of aircraft loan transaction
  • The aviation lending landscape is very dynamic
  • There is a lot of capital wanting to be deployed into aviation lending

Recent Transactions

Closed June 2017
Gulfstream G550
Loan Amount $14,000,000
5-Year Term
U.S. Corporate Borrower

Closed June 2017
2001 Cessna Citation CJ1
80% LTV Including Improvements
5.5% Fixed Rate
48 month term
156 month amortization
High net-worth Individual Midwest US

Closed June 2017
2009 Cessna Grand Caravan
75% LTV
4.5% Fixed Rate
60 month term
180 month amortization
High net-worth Northeastern Client

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