Investment or Lending Strategy by Product - 2020

Wondering how people are approaching CRE in the near term, say 6 to 12 months, in terms of transactions. Both from a sponsor and lender perspective.

What product type are you looking to buy, begin construction on, or lend on in the near term?

Seeing any challenges in finding debt at desired terms? Difficulties in finding construction financing?

At my lending institution we are taking it deal by deal, as our thinking is evolving given all of the unknowns. Looking more favorably towards multifamily, distribution, and maybe self storage. Office and retail are dead unless under very consrevative terms.

Comments (11)

 
 
Apr 23, 2020 - 12:52am

Our banks (household names) have completely stopped lending on all retail, unfortunately for us. They are open to multifamily still. Our industrial assets are faring well. We plan to enter the senior housing space within the next 2 years. We may use HUD financing for that if regular lenders still won't give the spreads we want.

 
Apr 23, 2020 - 3:18pm

I've been told the typical Libor + 250 for new construction of SH is gone. Although I've been told HUD 232 would provide a fixed rate of around 3.50% for 40 years - do you have any more insight on this loan type?

If you don't mind, I'd greatly appreciate any underwriting info/proformas/operating statements you could provide on similar projects. We are just getting started and trying to do our homework.

 
Apr 23, 2020 - 3:50am

I see a lot of opportunity in affordable housing. Issue with B/C class tenants are those tenants are mostly service workers who might get furloughed or let go, not being able to pay rent.

Your downside is capped with Section 8 rents, so HUD seems like an ideal situation. It's slow and bureaucratic, but at the end of the day, government paychecks.

IMO new construction is the best

 
Apr 24, 2020 - 3:13am
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