These are the sectors where real estate lending is still happening: report

Multifamily remains safe-haven asset class for institutional lenders

National /
Apr.April 02, 2020 08:00 AM
Banks, funds, mortgage REITs, and agencies like Fannie Mae and Freddie Mac have all begun adjusting their lending approach in face of the economic downturn (Credit: iStock)

Banks, funds, mortgage REITs, and agencies like Fannie Mae and Freddie Mac have all begun adjusting their lending approach in face of the economic downturn (Credit: iStock)

While some parts of the real estate lending world have been shut down by the coronavirus pandemic, plenty of investors still need to find places to deploy their capital — but a bit more carefully.

Banks, funds, mortgage real estate investment trusts, and agencies like Fannie Mae and Freddie Mac have all begun adjusting their lending approach in face of the economic downturn, according to a new capital markets report from Miami-based real estate capital advisory firm Primrose Capital.

“At present there is a conundrum between investment managers’ inherent need to deploy capital, while simultaneously assessing risk and ensuring appropriate capital preservation measures are in place for its stakeholders,” the report says, noting that private real estate debt funds globally had $181 billion in assets under management as of last July.

Lending remains active for multifamily and industrial assets, while office properties have seen a slight pullback. Retail lending has become almost entirely illiquid amid mass store closures, while investors see slightly more opportunity in hotels, albeit on a very selective basis. And condo lending, which was already at a standstill pre-coronavirus, is not likely to turn a corner any time soon.

(Click to enlarge)

(Click to enlarge)

Debt funds and mortgage REITs have remained active in bridge lending, and somewhat less so in construction lending, as cities across the country have halted non-essential building in response to the epidemic. Commercial banks are focusing on existing clients or experienced borrowers while reducing leverage.

CMBS issuance has dried up due to lack of investor demand, and Fannie and Freddie have introduced stricter terms for new loans — while offering relief for existing borrowers.

Finally, large developers in the lending space have been selectively offering bridge financing for projects with unique needs — and charging as much as a 2-percentage-point spread premium in return.


Related Articles

arrow_forward_ios
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)

Real estate stocks push up this week as U.S.-China trade tensions ease

Real estate stocks push up this week as U.S.-China trade tensions ease
416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)

Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case

Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
(iStock)

Mortgage applications skyrocket in holiday week

Mortgage applications skyrocket in holiday week
Foot traffic in Union Square, the Flatiron District and Chelsea is down by 50% from February. (Getty)

Foot traffic remains low in prime Manhattan neighborhoods

Foot traffic remains low in prime Manhattan neighborhoods
About 25 percent of employees had returned to work as of Nov. 18 (Getty; iStock)

Offices remain empty, and big cities are feeling the crunch

Offices remain empty, and big cities are feeling the crunch
Singapore (iStock)

Singapore luxury market rebounds despite fewer foreign buyers

Singapore luxury market rebounds despite fewer foreign buyers
The tax break allows foreign visitors to reclaim a sales tax of 20 percent on items bought in the country for more than £30 (Getty; Unsplash)

UK tax break expiration could hurt struggling retailers

UK tax break expiration could hurt struggling retailers
(iStock)

Mortgage requests surge ahead of Thanksgiving

Mortgage requests surge ahead of Thanksgiving
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...