Latest Finance Trends

Count on plenty of available bridge capital throughout the year, given market uncertainty. Bridge lenders are increasing their allocations for 2025, which will lead to more competition and looser underwriting standards. Many out-of-the-box deals, assets coming out of construction or loans needing higher leverage will have to seek bridge financing. With the gap narrowing between SOFR-based and Treasury-based lending, keep an eye out for more “bridge light” lenders to take on more risk than they usually would. Expect life companies to be more active in bridge lending this year, as well as some CMBS lenders entering the game. More

JV and pref equity investing should slowly begin to pick up this year as investors need to start moving dry powder. Since the initial rate hikes in March 2022, common equity investments from institutional groups abruptly halted, accumulating a stockpile of dry powder. Many equity investors waited for distressed opportunities and paused their JV platform to start issuing pref equity to achieve high rates of return with debt-like structures. Distressed opportunities have been fewer than the market expected, and those groups will need to deploy to non-distressed product. More

Keep an eye out for bank originations to increase in 2025 as more banks come back into the market. Strong underwriting and quality deals will be key factors in getting loans done. Even with this pick up, banks will remain selective due to elevated interest rates, regulatory scrutiny and economic uncertainty. Large money-center banks are active and offer attractive rates but with high credit/underwriting criteria, while regional and community banks are slowly re-entering the game. Some community and regional banks have delinquent loans on their books that they have been extending and pretending for more than 12 to 18 months and rates are not low enough to heal these loans just yet. More

Watch for modest increases in senior housing lending this year. Occupancy is stabilizing and inflation and labor pressures have softened in the space. Private pay Class A assets will continue to lease-up and post strong rent increases as incoming supply screeches to a halt. Development capital will still be difficult to find because of interest rates and construction prices. The agencies will continue to be the primary source of permanent financing for senior housing. Also, keep an eye out for a small number of life companies, banks, private money lenders and debt funds that will fund senior housing deals. More

Construction lending will increase due to the continued absorption of supply, and the number of construction lenders could double in 2025. Watch for more big banks to re-enter the market, although their terms will vary. The all-in rate for bank construction is lower than debt funds and private money lenders; however, with limited dry powder, the banks are reserving capital for their best development customers. Private lenders, debt funds and select regional banks will likely remain the most active, as they often have more flexibility in structuring deals. More

We asked some leaders in the industry to tell us what they foresee for the commercial real estate market in 2025. Here they give some insights on predictions for subordinate debt, the hotel market, the multifamily market, C-PACE lending and real estate investing in 2025. More

We asked some leaders in the industry to tell us what they foresee for the commercial real estate market in 2025. More

The Mortgage Bankers Association (MBA) and CBRE both released positive third quarter numbers for commercial real estate; a trend that is expected to continue until the end of the year. Lower rates were a big factor in these positive numbers and most property types showed increases in dollar volumes. Multifamily had a very favorable third More

Self storage has been one of the better performing asset classes, which will lead to plenty of available capital next year. The permanent finance market is strong with both CMBS and life companies offering solid attractive options. However, bank financing, especially construction financing, is currently more difficult. Many bank lenders continue to sit on the sidelines. Expectations for the economy to improve with limited inflation risk will show confidence in the market for banks to get back into lending. More

Count on more available capital for hotels in 2025 due to pent-up demand and investor eagerness to transact. Hotels will become a more preferred asset class as there is strong value potential; look for more sales activity going forward. Terms will largely stay the same, but there will be more participants willing to lend. Lenders More

Retail will continue to be a preferred product type going forward. Underwriting standards will loosen with declining interest rates. There has been so little development in retail, which has allowed the sector to maintain high occupancy. Look for a push toward new development next year. The location will not be as important going forward; as long as it’s a strong center with favorable tenants, borrowers will see available capital. Demand drivers will be key going forward. CMBS lenders are back versus a few years ago leading to more capital and competition in the space. More

Condo lending will open next year, especially as rates come down. Demand will be stronger as workers return to cities where condos are more affordable and often more convenient. Underwriting will loosen as rates drop, which will be beneficial to borrowers. The biggest factor will be presales. The construction lending market for condos will be liquid, especially among the debt funds. Lenders want to see presales that support the underwritten sellout, and lenders will be leverage-sensitive due to the usage of borrower deposits in certain states, which creates additional leverage for the sponsors. There will also still be a need for condo inventory loans as developers need time to sell once they are built. More