Latest Finance Trends

The Federal Reserve recently lowered the federal funds rate by 50 basis points to a range of 4.75% to 5% and said it expects to make two additional cuts this year and four in 2025. The Fed also lowered its 2024 inflation outlook to 2.3% from 2.6% (personal consumption expenditures) and reduced its GDP growth forecast to 2% from 2.1% for the year. More

The bank construction lending market is slowly beginning to show positive signs after spending much of the year on pause. Anticipate banks to become more active participants and competitive options for construction lending in 2025. With interest rates starting to decline and the Federal Reserve likely cutting its benchmark rate, more deals will start to pencil, especially construction and construction takeouts. More

The equity investing market will continue to be slow, especially JV equity investing. Many JV investors are on the sidelines or are opting to provide pref equity instead — but with JV pricing. Investing may not return to normal levels until 2026 after rates drop, construction costs normalize and there have been more transactions in More

Look for more competition and increased flexibility for single-family rental (SFR) and build-to-rent (BTR) deals going forward. Expect overall deal volume to ramp up later this year into a strong 2025. Next year should be robust as the Federal Reserve will have begun cutting short-term rates and there will not be any election uncertainty. Rates could even start coming down as early as next month. Lenders will become less selective given the amount of dry powder raised that still needs to be deployed. More

Count on 2025 to be a record year for C-PACE financing. There will be increased demand, especially because of the disruption in the marketplace, as C-PACE can help fill the gap left behind by senior lenders. This can be used to fund new construction developments, substantial rehabilitation projects and to recapitalize recently completed projects. More More

Keep an eye out for land lending to increase by year’s end as rates decline. More lenders — especially debt funds — will be entering the market with the new year and new allocations. Banks should slowly start to re-enter the space as well. Land lending should grow around 20% in 2025. Acquisition-to-development bridge loans will be the easiest to get done going forward. Demand drivers will be key. More

There will be an increase in hotel transaction volume during the second half of 2024 and into 2025. With treasuries dipping well below 4%, all-in rates are back in the mid- to high 6% range for hotels. As long as treasuries continue to stabilize — lowering the overall cost of debt — more deals will pencil. There could be even more restrictions on the bank side due to increased regulations already set to roll out. Count on that void to be partially filled by debt fund, private money and CMBS lenders. Keep an eye out for an increase in alternative hotel lending sources in the next year, many of which are very competitive and flexible. This is due to the transition away from office loans and certain types of retail deals into hotel lending as a lot of banks were light on hotel exposure and are rethinking allocations. More

Count on a continued slow improvement in the multifamily bridge market through 2025. This is based on higher investment sales activity and what appears to be increased engagement by sellers and buyers. Loan spreads for multifamily bridge will remain flat to slightly tighter as market conditions continue to improve. There will be plenty of demand for bridge loans going forward. Watch for more volume and spread compression throughout the rest of the year. Look for the debt funds to be active moving forward, as mid-size transactions pick up in the next 12 months. More

Look for construction lending to increase during the fourth quarter as many funds get new allocations. Construction lending will be strong going forward as there is a need for housing and lenders feel safe with floating-rate debt and not constrained by fixed-rate deals where they can be caught on the wrong side of interest rates. The banks are holding back because of their limited liquidity, which leaves a large vacuum for the private lenders and debt funds to step in. Banks are seeking deals with experienced sponsors. They will prefer low leverage and the location must be strong with good density. More

The National Retail Federation (NRF) has unveiled its 2024 list of the Top 100 Retailers. The annual ranking, compiled by global marketing data firm Kantar, is based on domestic sales and offers a snapshot of the retail industry’s leading companies. “This year’s list of the Top 100 Retailers largely reflects a post-pandemic return to normal,” More

Keep an eye out for more lenders considering senior housing deals once again. The sector has already seen more lending activity than this time last year. This is a function of banks re-entering the market, along with other factors such as an uptick in acquisitions, as fundamentals across the sector continue to improve. Banks are also no longer providing extensions, thereby motivating borrowers to sell. The increase in transactions will help with re-establishing values. Margins in the industry are also beginning to recover, such as expenses and payroll costs stabilizing. More

CMBS lending has vastly improved over this time last year and will continue to steadily increase throughout the rest of 2024. With around $45B already originated, total originations could be close to $100B total this year. This means the sector is returning to more normal levels. The overall outlook for CMBS is very strong, especially as compared to the regional banks and life company lenders. CMBS is able to offer higher proceeds as they size the loans off an interest-only payment, versus amortizing. The biggest advantage they offer is the ability to buy down the rate. Borrowers can buy down the rate by up to 6% points. More