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
(Credit: iStock)

S&P hits another record, but real estate stocks don’t follow suit

S&P hits another record, but real estate stocks don’t follow suit
Lenders issued the most mortgages in 14 years last quarter (Credit: iStock)

Nonbank lenders could give serious boost to cooling housing market

Nonbank lenders could give serious boost to cooling housing market
From left: Boston Properties CEO Owen Thomas, Alexandria Real Estate Equities CEO Joel Marcus, and Equity International founder Sam Zell (Credit: Getty Images and iStock)

Real estate firms get (green) thumbs down as they jump into climate bonds

Real estate firms get (green) thumbs down as they jump into climate bonds
The stock market was up overall last week, and so were some real estate stocks. (Credit: iStock)

With Fed rate cut on the mind, markets enter the week riding high

With Fed rate cut on the mind, markets enter the week riding high
CrowdStreet CEO Tore Steen and vice president Darren Powderly (Credit: CrowdStreet and iStock)

Crowdfunding platform launches $20M Opportunity Zone fund

Crowdfunding platform launches $20M Opportunity Zone fund
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
Opendoor CEO Eric Woo and images of its Opendoor Home Loans app (Credit: Resolute Ventures)

iBuyer startup Opendoor launching new home loan program

iBuyer startup Opendoor launching new home loan program
Seritage CEO Benjamin Schall and a shuttered Sears location (Credit: iStock)

Amid Sears bankruptcy, Seritage posts $26M net loss in Q2

Amid Sears bankruptcy, Seritage posts $26M net loss in Q2
arrow_forward_ios

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

Loading...