More lenders in more places? It’s not all good, says economist

Sam Chandan warns that increased liquidity in property sector doesn't help secondary market

TRD New York /
Mar.March 04, 2014 03:10 PM

“More lenders in more places” may be good news to some borrowers, but not all, according to an influential commercial real estate analyst.

Sam Chandan, the president of Chandan Economics and former chief economist for Real Capital Analytics, says that while reengaged lenders and easier access to financing may be a plus to more modest borrowers, the easing of credit doesn’t do much for the secondary and tertiary markets and markets for value-add investments.

“For both debt and equity, uncertainties related to the underlying economics of property performance matter more in these markets,” Chandan wrote in the New York Observer. “Their smaller scale entails more limited liquidity and a stronger anchoring to income. The secondary-market lag has widened sufficiently over the last year such that investors and lenders have inevitably come in search of yield.”

Forces are at work to influence the quality of loans as well, including the much-discussed wave of CMBS loans slated to mature over the next few years. Chandan said that would present an opportunity to investors seeking high-yield distressed debt.

Chandan also predicts that lenders who can tell the difference between risky and very risky will see their market share grow after the market peaks and competitors “have been waylaid by their own balance sheets.”  [NYO] –– Angela Hunt


Related Articles

arrow_forward_ios

“No one should be lending for 30 years in most of Florida,” financial climate analyst warns

Battle of the banks: These were NYC’s most active luxury home lenders in 2018

Lightstone getting in on the lending game

Nonbanks eat up lending market share with 40% increase in loan origination

The death of the all-cash Chinese buyer

Moinian ramps up lending with over $200M in NY, SoFla deals

“It’s like jungle animals surrounding a dead animal”: Inside the world of mezz debt

Real estate lending could be due for the Hunger Games

arrow_forward_ios