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    Self storage locks down lenders

    Expect self storage to be a favored asset class this year. There is a need for self-storage space in many markets and occupancies are not expected to soften anytime soon. Lenders like the fact that this property has consistent demand throughout the good times and the bad. Self storage is still one of the top performers in the commercial space with very few losses experienced by lenders. Certain markets could experience some overbuilding, but lenders will work to keep developers in check and lend to markets that show a need for additional space. More

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    Equity will get a jolt during the second half of the year

    JV and pref equity deals will continue to be difficult for the first part of the year as many investors remain on the sidelines. Rising rates have caused floating-rate debt to be above most cap rates, resulting in negative leverage. Some JV equity providers have shifted their focus to the debt side or will invest as pref equity only. There has not been a lot of acquisition equity being placed and a huge pullback in ground-up development is occurring. However, it is not all doom and gloom. Whispers are that the Fed plans for at least three rate drops this year and once that happens, there will be more activity. More

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    Hotel construction lending will improve in 2024

    Hoteliers will see more available hotel construction capital this year. Look for lenders to come off the sidelines and consider hotels once again. With interest rates projected to remain stable or decrease, there will be more deals that will work on a cash-flow basis due to the lower interest rates. The projections for interest rates in the near term will allow underwriting to “work” for more transactions. This will allow borrowers to refinance existing deals that have recently opened. More

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    Affordable housing will be slow but steady next year

    Overall, the affordable market has slowed in 2023 and all signs are showing that trend will most likely continue through 2024. There will be headwinds within the affordable lending space going forward as owners adjust to the elevated interest rate environment. Next year should be very similar to 2023 in the way of total production of new affordable housing units, total preservation of existing units, as well as total loan volume and tax credit equity volume. More

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