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

Multifamily remains safe-haven asset class for institutional lenders

TRD 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
Orange County becomes the first Southern California jurisdiction to restart pre-shutdown eviction orders. (Credit: iStock)

Evictions are back in Orange County

Evictions are back in Orange County
Nury Martinez, City Hall (Credit: Twitter, iStock)

City of LA’s $100M rental subsidy program would be boon to multifamily landlords

City of LA’s $100M rental subsidy program would be boon to multifamily landlords
John Atwater, CEO of Prime Group, and Park La Brea (Credit: Brown University, and Park La Brea)

At Prime Group’s 4,200-unit Park La Brea, social distancing is a big problem

At Prime Group’s 4,200-unit Park La Brea, social distancing is a big problem
Rick Caruso, the Grove mall (Credit: Donato Sardella/Getty Images, and CARUSO)

If you clean it, will they come? Rick Caruso’s visible plan to reopen malls & resorts

If you clean it, will they come? Rick Caruso’s visible plan to reopen malls & resorts
An illustration of Gavin Newsom (Credit: Michael Kovac/WireImage via Getty Images, and iStock)

California OK’s retail re-openings, but leaves key decisions to local officials

California OK’s retail re-openings, but leaves key decisions to local officials
Griffith Park (Credit: iStock)

Developer’s folly means more space at Griffith Park

Developer’s folly means more space at Griffith Park
3M CEO Mike Roman and Altaris Capital Partners Principal Garikai Nyaruwata

N95 mask-maker 3M sells Northridge manufacturing plant

N95 mask-maker 3M sells Northridge manufacturing plant
Fewer homes are selling across Southern California, but low supply helped push pricing up across the region.

Far fewer SoCal homes traded in April, but prices rose

Far fewer SoCal homes traded in April, but prices rose
arrow_forward_ios

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

Loading...