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    CMBS will be more competitive next year

    Look for CMBS lenders to be more active in 2024, especially as there is increased clarity around long-term rates. CMBS volume will also benefit from some of the regional banks pulling back origination volumes. Lending will be a function of pricing and CMBS originations will be challenged due to a lack of trades. An additional challenge will be continuous monitoring of existing debt that is coming due, and lenders will be unable to cleanly refinance out. Negotiations with the servicer will likely continue for years to come. More

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    Office lending will remain difficult into 2024

    Office will continue to be the toughest property to finance going into 2024. The overall tightness in the credit markets will be even more pronounced for office assets. Transactions with big price readjustments and fresh equity will see available financing, although with conservative terms. There has been some return to the office directives from many companies but expect them to reduce rent expenses if the current economic headwinds persist. More

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    Construction lending will slowly build into next year

    There will be plenty of capital in the market for construction, however, lenders will be heavily scrutinizing deals. Fewer projects, higher rates and regulatory issues have slowed the number of transactions being funded. The high cost of borrowing will also make construction lending more difficult. Banks and life companies will be in the market, although with lower leverage. Watch for more available capital from non-traditional sources to fill the gap. There will be a large number of construction projects that need capital next year. Anticipate lenders being more selective with who they will work with. More

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    Lenders are shopping for retail

    Count on retail lending to loosen going forward, especially for fully leased centers with solid tenants. More lenders will switch back to retail next year, especially as office remains tough to finance. Look for life companies to be the best source, while the CMBS market should pick up in 2024. Banks will actively lend on retail, but will require substantial deposits from borrowers — typically 10% to 30% of the loan amount in deposits. In 2024, retail should be seen as a stronger asset type by lenders, as the property has exceeded expectations in fundamentals and loan performance. More

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