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8 Key Takeaways From The 2023 MBA CREF Conference

This year’s MBA CREF 2023 conference in San Diego was an opportunity to dig in and assess the significant changes in market conditions since the last meeting in 2022. This year, 2800 commercial real estate finance professionals gathered for the three-day event. Gantry sent 35 of our production team leaders and conducted more than 100 individual meetings with lenders. Our lenders spoke, and we listened. Here are some relevant takeaways from what we learned.

Market Sentiment

The overall demeanor was positive on allocation targets, but with most attendees agreeing that they hadn’t seen this level of forward uncertainty since the 2008-2009 era. However, confidence is strong that there is far more liquidity at play in this current cycle, even as rate volatility continues to curtail market activity. Much of this uncertainty can be attributed to the unforeseen disruptions of the war in Ukraine, aggressive inflation, the final phase of post COVID recovery, and occupancy shifts from remote workplace transitions. Expected Fed rate increases, through at least the first half of 2023, means rate volatility will continue to be an issue moving into 2023.

  • We will be in this higher rate cycle for the foreseeable future.

  • Lenders generally expect higher interest rates for longer.

  • Transactions will remain slow for H1 2023 as the market continues to adjust.

  • Price discovery is still ongoing but should be evident by H2 2023.

  • Maturities and distress will motivate price discovery.


For many sponsors, the upward shift in rates has stifled new transactional activity and subsequently created a sense of uncertainty. However, options exist for most performing assets and viable financing solutions can be found amongst a range of lenders. Many borrowers are now opting for shorter, albeit more expensive, loan terms, with expectations that rates will be in a better place upon maturity. Price discovery will remain a priority for market normalization. While the current rate climate poses some difficulties for new transactions, a wave of pending maturities will require a significant amount of refinancing this year. Borrowers should expect that new equity may be required to meet leverage points and debt service coverage, and that all lenders will be keenly focused on sponsor experience and asset specific business plans.

  • Have a relevant story, and the supporting research to prove it.

  • Experience will be rewarded in this market climate.

  • Maturities have options, earlier the engagement the better.

  • Desire for shorter term loans in the 3-, 5-, 7- year range with prepayment flexibility.

  • Price discovery will be a requirement for a return to transactional normalcy.

Life Insurance Companies

Despite broader market uncertainty, insurance company lenders have remained active and competitive. Life Company allocations are the same as 2022 year-end production with the ability to increase as CIO’s favorably view commercial mortgages as an alternative investment providing high relative value. Spreads have compressed to start the year, creating a significant gap between what they can offer compared to banks. Balance sheets have also remained very healthy. Insurance companies are currently the most competitive and dynamic capital sources in the market.

  • Well capitalized and ready to lend.

  • Overall best rates and spreads.

  • Life companies compete on rate with prepayment flexibility.

  • Lock rate at application.

  • Strong appetite for all asset classes, except hospitality and office, which are being done on a very select basis.


Agency sources (Fannie Mae, Freddie Mac, HUD) are eager to increase their market share of multifamily financings, especially for ‘mission driven’ properties that meet broadly defined affordability hurdles and or ‘green’ environmental objectives. Capturing more volume in a shrinking pool of opportunities will necessitate leniency and creativity. As such, they’ll increase loan proceeds by stretching amortization schedules (up to 35- and 40-years), soften debt service coverage ratio requirements, and even entertain rate buy downs. Further, they’ll be more lenient with interest-only periods, and push to be more competitive with early prepayment flexibility.

  • Agencies aggressively competing for multifamily loans.

  • Prioritizing affordable and green projects.

  • $150 billion to lend split between Fannie and Freddie

  • Leverage tied to debt service coverage and sponsor history.

  • Flexible on overall terms to mitigate impact of higher interest rates.

Debt Funds

Like banks, debt funds have adopted a risk-off mindset and are hyper focused on a believable take-out strategy. Active groups are seeing a bevy of requests, but as few deals pencil, they can be quite selective on which opportunities to pursue. No longer relying upon a blanket rent growth thesis for bridge executions and across the board, they are providing 10-15% less loan-to-cost than in mid 2022 given a keen eye to loan take-out underwriting. Given some of their higher LTC deals originated over the last 18 months are in triage, much of their high-risk construction lending business has ground to a halt. Requests with a clear path to success or strong sponsors are still considered, but the business plan needs to make sense.

  • Becoming more conservative on underwriting.

  • Available for preferred equity and mezzanine positions.

  • Looking to fully understand exit strategy at maturity.

  • Backing away from new construction financing.

  • To avoid a potential re-trade, it’s important to vet bridge lenders.

  • Rescue capital is not prevalent.

  • Balance sheet debt funds with liquidity provide more certainty of execution than those requiring back-end leverage by selling off an “A piece” or accessing the securitized market through CLO execution


By and large, banks have not responded well to broader market uncertainty and most large “money center” banks are effectively out of the market. Very few banks are offering perm debt with rates less than 6.00% in our core West Coast markets, and those that may seek a large depository relationship due to a liquidity shortage. While some banks are doing an excellent job of servicing their existing clients, others are seeking to perform damage control within their portfolio and are starting to request significant loan paydowns in the near term as LTV or DSCR covenants are triggered. Overall, banks are not stepping up to win business from new relationships and that is not expected to improve this year. Banks will continue to be sidelined until loan to deposit relationships are better balanced and payoffs start to occur.

  • Increasing depository covenants.

  • Reduction in lending volumes.

  • No longer recycling loans.

  • Recourse requirements becoming more prevalent.

  • Fair appetite for all asset classes, excluding office.


CMBS is often regarded as a “last resort” lender in the current market climate given the amount of rate volatility associated with this execution. Appetite for new deals is strong but pricing/risk doesn’t make sense, unless needed. For borrowers in challenging situations, leverage points and risk adjusted underwriting create a viable window for a resurgence of CMBS lending in 2023. Various CMBS lenders have rolled out 5-year term programs, which historically have not traded well in the bond market. The 5-year term will have its own securitization, which is allowing better pricing and borrowers can refinance with a shorter term instead of locking in 10-year money with no prepayment flexibility.

  • CMBS spreads are often 75-150 bps wide from other perm lenders.

  • The first securitization of 2023 was on a five-year fixed basis, almost entirely interest only.

  • Since coupon is not locked until close, this can significantly impact proceeds as rates rise.

  • Offering interest-only terms across the life of the loan.

  • Great resource for office properties and other troubled asset classes.

Asset Types

Asset class hierarchies remain static, with industrial and multifamily properties continuing as primary preferences for all lenders. Grocery anchored retail continues to be a targeted allocation and hospitality is staging a comeback across a spectrum of finance sources, with CMBS sources being the only ‘bullish’ platform for office and hospitality. When it comes to office, the performance of suburban office over urban CBD product has not gone unnoticed by the full range of lenders. The performance of self-storage within lender portfolios over the past decade has a range of lenders attracted to the sector, particularly life companies.

  • Industrial and Multifamily remain preferred.

  • Grocery anchored retail remains strong.

  • Hospitality returning to a more favored status.

  • Self-Storage performing well and attractive to most capital sources.

  • Office most challenged. Suburban outperforming Urban CBD.

Asset Specific Insight

Every property or portfolio is unique. Contact your Gantry representative or any of our regional offices to speak with a production leader that can tailor some perspective and outline some options specific to your current needs.

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