Since our founding in 1991, Gantry attends the annual MBA CREF conference to ensure our loan production teams have access to the widest possible number of debt capital sources on behalf of our clients. 2024 was no different. Here’s what we found out.
OVERALL MARKET
There was no shortage of lenders in attendance at this year’s conference. Liquidity is abundant for commercial real estate loans from the full spectrum of lending sources, which include insurance companies, debt funds, CMBS, agencies, credit unions, and banks.
Gantry’s production teams met with lenders offering different programs that can meet most commercial finance needs. These programs range from traditional fixed rate permanent and bridge loans to construction, preferred equity, or participation loan structures.
FLEXIBLE PRE-PAY
Borrowers are currently pursuing shorter term loans in the 3- to 5-year range, hoping to refinance down the road in a lower rate climate. Lenders are responding to this reality with new loan programs or flexible pre-payment structures in longer term programs.
RATES
Lenders expect to be in a “higher for longer” rate climate when compared to the recent years of low-rate debt capital. Current rates meet historic norms but are a challenge for many borrowers because of assets maturing from lower rates. Experienced professionals in telling the story of a property, structuring transactions to meet the borrower’s goals and access to the whole capital market for commercial real estate is critical for any maturing loan.
INSURANCE COMPANIES
Insurance companies remain a consistent and stable source for financing in the current cycle and will continue in 2024. These capital sources are looking for quality assets and vetted sponsors with a story to tell. They will leverage their correspondents to effectively deploy capital and identify these projects.
CMBS
CMBS is poised to make a comeback in 2024 with conduit lenders competitive again as both spreads and treasuries tighten. CMBS lenders are becoming more creative with their loan programs, offering new products with shorter loan terms and interest only repayment throughout the life of the loan.
AGENCIES
Agencies did not meet their allocation targets in 2023 and plan to aggressively pursue allocations to qualifying assets in 2024, with a hyper-focus on funding affordable projects.
DEBT FUNDS
Debt funds are opportunistic and remain a vital option in the current market cycle. They are concentrated on underwriting to exit as they process through their maturing loans.
BANKS
The majority of banks remain sidelined in the current cycle as they shore up their balance sheets and respond to evolving regulatory requirements. They remain an option for their best clients and will require a significant depositor relationship for any new borrowers.
RESCUE CAPITAL
The era of lend, extend, and now pretend is ending. There are viable rescue capital resources available but expect that this reality will require sales in many cases. This will aid in establishing values and increase the demand for new loans as sponsors transact.