The commercial real estate market in 2024 is vastly different from what we experienced coming out of the pandemic. As we approach the fourth quarter, there are already signs of shifting circumstances. At Connect Texas Multifamily on August 20 at Virgin Hotels Dallas, industry experts like Vic Clark, senior managing director at Lument, will share their insights and predictions for the future lending landscape. In anticipation of his participation in a panel discussion titled “Dealmaking Update: Making the Numbers Work,” Clark provided some key points to set the stage.
Q: How has traditional lending been affected by current conditions? Is multifamily also being impacted?
A: It varies depending on who you ask. Traditional banks have been pulling back for several years now due to pressure to clear their balance sheets and avoid extending troubled loans any further. This means they are putting pressure on borrowers to refinance or sell properties or significantly pay down loans in order to reduce their exposure risk. While this may be true for most banks overall, it can vary from bank-to-bank.
Q: Do you expect this trend to continue throughout 2024?
A: Yes, I believe it will remain relatively unchanged until next year when many problem loans have either worked themselves out or been sold off by mid-2025.
Q: What would make a loan request more appealing under these current conditions?
A : For multifamily properties specifically , lenders want stability . Borrowers should come prepared with three months’ worth (or more) of stable collections data as well as solid insurance quotes from multiple companies given recent upward trends in that sector .
Q : Are any elements less important during times with lower interest rates ?
A : Lower interest rates certainly help alleviate certain issues such as lower collections and higher expenses , but they do not solve all problems . However , when treasury yields dropped over six months ago , my phone started ringing off-the-hook because suddenly deals were becoming feasible again .
Q: Are borrowers becoming more creative in their approach to securing loans?
A: Our clients are mostly repeat customers, so we work together as a team to find solutions. With new clients, it’s a collaborative effort where we use our expertise from working on numerous deals to offer suggestions and ideas. We also encourage the borrower to come up with potential solutions as well.
Q: Any final thoughts or comments?
A : I’ve been advising my clients for the past three months that every lender will be extremely busy between now and the end of 2024 . Fannie Mae and Freddie Mac have already been swamped since mid-June , so there will likely be a mad rush for lenders’ attention over the next six months . Borrowers should expect longer wait times due to high volume .
Don’t miss out on tomorrow’s Connect Texas Multifamily event at Virgin Hotels Dallas! Hear from industry leaders like Legacy Partners, Tower Capital, Transwestern, Kairoi Residential , Lument , TruAmerica Multifamily , LaTerra Development , Helu Capital ,
Institutional Property Advisors,
RCKRBX,
Greystone,
ZOM Living ,
KFM Engineering & Design
and more. Register online or onsite – see you there!
