Its a bit weird. We're on the lending side and it seems we're just twiddling our thumbs right now. How is everyone else faring? Are other lending shops the same right now? Acq shops? Dev shops?
Usually we have our slow periods and busy periods, but since March we been almost doing nothing right now. A bit worrisome.
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Lending side as well. Also very slow. With interest rates rising, a lot deals don’t pencil the same way they did a few weeks/ months ago.
I’d guess there is an adjustment period where either A. Sellers expectations adjust and cap rates rise (the logical answer IMO) or B. Buyers with capital already raised get impatient and continue to buy at today’s prices despite debt being more expensive (the realistic answer IMO).
*this is for agency multifamily btw. Cant speak on other asset classes or larger deals that have been typically done through lifeco or debt fund lending.
On the lending side, we are busy. Seeing a lot of big structured deals, some in need of equity recaps from sponsors.
Acquisitions shop that also does LP Dev. Busy still
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Tier 1? Shit that goes hard 😎
What type of lending do you do? I am in agency and bridge. Agency is obviously slow but bridge loans are keeping me super busy, thank god we have a balance sheet. Pain in the butt for sure but glad to just be employed right now lol.
Multifamily developer here, never been busier in my career. Five deals scheduled to close by Q1 23 and all at various stages. That's on top of projects under construction / leasing up.
Could not agree more
Also busy, but will get somewhat less busy if construction costs don't stop escalating at this rate...
This. Recently received bid for 60 unit, 5 story stick over podium on urban infill site that was 20-25% higher than expected. Even with significant VE there goes all the profit. Higher density designs w wrapped garages/surface parking should still pencil but only if you’re creative on the financing side and can find a good deal on land!
Yup. It has slowed down for us after having an incredibly busy 1st quarter
Busy underwriting and sourcing deals that don't pencil and we would never end up doing... lmao
Yup. This is what its been with us. Staying busy underwriting all day, but bearing no fruit for labor.
I think it's because we are investing deal-by-deal and raising for a new fund, so equity raises are going to be really tough, but the groups that already have capital and need to deploy are still acquiring, they just have some crazy assumptions I guess.
Underwriting a lot of stuff where sellers' expectations have not been adjusted for debt markets, future of office, etc. Hoping some things shake loose soon.
This hurts LMAO. I'm currently underwriting a deal where ask is $400/NRSF. We stretched our asses off and couldn't get past $250 / NRSF for a similar asset in a similar market 6 months ago. Like the forward curve has blown out 150 bps since then and all of a sudden I'm going to somehow find 60% more?!?!
Interesting to hear others are slow. Also in private lending and we are slammed right now.
Are you lenders requiring sponsors to put in my equity (and lowering LTVs)?
And what’s the general term/structure of new originations these days. More floating vs. fixed than prior months, etc?
a lot of floating rate 3 +1+1 deals. CMSB markets is erratic so more borrowers are going to balance sheet lenders. So harder to get cheap fixed rate debt. But that doesn't mean spread are "much" higher than CMBS(where it was 3 months ago).
Most sponsors putting in money to lower LTV's due to business plans not being met. A lot of structuring going on to monetize mezz, or put in fresh capital.
On the lending side right now, Bridge loans, fixed/perm and even C-to-P products are all in high demand. I've never been busier and am on pace for a record year. Some deals have fallen through due to buyer retrades when they were unable to get the leverage they needed. LTVs on value-add apartments are maxing out around 60%-65% ltpp, and 55%-60% LTC now. they were 10% higher a few months ago. cap rates in core markets are still in the low 3s on in-place NOI.
Multifamily developer. The firm is crazy busy, but personally it's been very slow. I've been staffed to two LIHTC projects which are dead in the water because of inflation and interest rates, and my market rate deals are under review by their cities, so there isn't much to do but sit on my hands in the meantime. I'm putting in 10 hours weeks right now, it's insane.
Acquisition/lending has been slow, but we've been very busy with dispositions
At a firm which does across the cap structure. Equity is slow (development focused), vendors are used to land prices which are priced to perfection and haven't adjusted their expectations yet for increases in costs and uncertainty around exit cap rate. Vanilla lending is busy as banks are becoming more selective, and we expect opportunistic lending to pick up as overly levered projects become unviable.
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