Mortgage delinquency rates, which have been a bellwether of distress in the CRE sector during the pandemic, are continuing to improve. One area of concern, however, is that elevated levels of delinquencies in the lodging and retail sectors are expected to linger as troubled loans slowly work toward resolutions, with some defaults expected. There are still a lot of “what ifs” that will influence how the amount of distress in CRE will play out. Some believe that distress has peaked and is gradually being worked out. Others think there could be more flare-ups of distress ahead in certain pockets,...
Commercial Loans
BANKS ARE FLUSH
Heading into the second half of the year, investors say lenders are so confident in the rebound of the economy they are even willing to finance deals involving the hard-hit hotel industry! It’s a sign that deal flow is back as lenders are again competing to provide money for the property sector that suffered the most during the pandemic as travel, tourism, and convention business ground to a halt. And now the movement is beginning to show up in statistics for all property types. The amount of loans on the commercial mortgage-backed securities market packaged into pooled bond offerings...
July 29, 2021July 29, 2021john
CRE FINANCE OUTLOOK CONTINUES TO BRIGHTEN
Last month we reported that the CRE financing market was looking up. This month we note that the trend continues. In a prepared statement April 28 following last month’s FOMC meeting the Fed announced that … “ Amid progress on vaccinations and strong policy support, indicators of economic activity and employment have strengthened. … Inflation has risen, largely reflecting transitory factors. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit (and cash) to U.S. households and businesses.” (Emphasis by Counsel Mortgage) The Fed goes on … “The Committee...
May 5, 2021May 6, 2021john
CRE FINANCE OUTLOOK BRIGHTENS
Seventy-seven percent of participants in the CRE Finance Council’s latest survey believe the economy will perform well over the next 12 months. The CRE Finance Council’s Fourth-Quarter 2020 Board of Governors’ Sentiment Index brought a new uptick of optimism about the future of commercial real estate finance. * CREFC’s Board of Governors consists of 56 senior executives representing the diverse facets of the lending and mortgage-related debt investing markets for CRE, including multifamily. In response to a key survey question on the overall outlook for the U.S. economy, a notable 77% of the Board indicated an expectation that...
March 31, 2021April 1, 2021john
SBA LOANS – 7(A) & 504 – BOTH ENHANCED BY THE SBA
Earlier in this message we highlighted the SBA promotion (enhancements) of the 7(a) program as a tool to help small businesses during the COVID-driven economic decline. Many of the relief provisions under the CARES ACT elevate the SBA 504 program also, including fee reductions and an extension of payment subsidies for new 504 loans. In a nutshell …
March 17, 2021March 17, 2021john
LENDERS RE-THINKING ASSUMPTIONS AS PANDEMIC CONTINUES
Now in mid-stream of the pandemic, commercial lenders are looking primarily at industrial, multifamily and selected office deals. But beyond that, other asset classes are drawing lesser interest, even though in some cases lenders are willing to stretch their comfort level. Some pandemic-driven re-purposing properties are being seen like life sciences conversion projects in nontraditional markets like Phoenix. With the talent present that supports the host of hospitals and medical related services, these projects are attracting attention of investors and lenders alike. While life sciences are currently hot, people are cooling off of other sectors. Investors need to distinguish between...
January 29, 2021January 29, 2021john
WELCOME TO 2021 – WHERE TO GO, WHAT TO DO?
Problems in the hotel, retail and lodging sectors are pushing the commercial mortgage delinquency rate up. “November did see small increases in newly delinquent retail, lodging and office loans, but at levels far below what was seen at the outset of the pandemic,” Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research, said in a statement. Office property delinquencies rose from 2.0% in October to 2.4% in November. Offices may also see a transition after the pandemic as many workers have become accustomed to working from home. Companies will need to decide if they want their employees working from...
December 30, 2020December 30, 2020john
CRE LENDERS ADAPT TO NEW MARKET DYNAMICS
Today’s post is written by Michael Green, Commercial Loan Originator for Counsel Mortgage Group, LLC. Capital markets remain healthy with a wide array of active lenders. As the nation progresses through the final months of the year, the lending landscape has vastly improved from the onset of the pandemic which brought lenders and investors to pause as they assessed the impact of COVID. Access to debt capital, though, has been far more abundant than during the global financial crisis (2008-2009), with the Fed taking extreme steps to shore up credit markets and ensure liquidity. Following the Q2-20 uncertainty-driven investment slowdown,...
December 3, 2020December 3, 2020john
APPLYING FOR A COMMERCIAL LOAN IN THE COVID ENVIRONMENT
Lenders have raised the bar on underwriting guidelines in recent years, and more specifically in the COVID era. Back in the good ‘ole days, prior to the Great Recession and now COVID, lenders did what might be now described as a cursory job of underwriting the borrower. They typically asked for a simple financial statement, personal & business, with a credit check, and that was the extent of the credit items required. Back then, they focused almost exclusively on the pros and cons of the property. And if they liked the risks associated with the property, it was very...
November 14, 2020November 14, 2020john
OUTSTANDING CRE DEBT CONTINUES TO INCREASE, IN SPITE OF TIGHTER CREDIT STANDARDS
Today’s post is written by Michael Green, Commercial Loan Originator for Counsel Mortgage Group, LLC Credit is the lifeblood of the economy, therefore a substantial tightening in credit conditions could cut the current recovery short. The latest Senior Loan Officer Opinion Survey points to banks tightening credit across all major loan categories. But loans at commercial banks account for only about 30% of the total credit extended to the U.S. private non-financial sector. Debt capital markets are more or less wide open again, which has helped keep credit flowing to larger businesses, and to households indirectly.
October 1, 2020October 1, 2020john