Obtaining commercial real estate financing for developments and investments has been challenging recently. To gain a better understanding of what’s going on, questions were posed to Gary Bechtel, CEO of Red Oak Capital Holdings. As a speaker at the upcoming Connect Texas Multifamily 2023 conference , Bechtel discussed changes in CRE funding, growing opportunities for private lending and the possible impact of pending debt maturities.
Investors seeking capital for projects have had to contend with several challenges including soaring inflation and lingering fears of a recession as well as chaos in the banking industry following regional bank collapses which had been key sources for CRE financing – causing capital markets to retreat or stop lending in Q1 2023. This created an opportunity bridge lenders could fill voids by providing investors with access to short-term capital at higher interest rates than traditional lenders due to spreads widening from 200-300 basis points in March 2023 according to CBRE survey results . Private debt is suddenly becoming an attractive investment target offering tangible income producing assets at 25%-35% discount compared valuation giving margin safety against pricing compression while LTV’s are compressed creating opportunities large amounts dry powder looking towards private debt investments . Stronger managers possessing expertise will stand out amongst competition during this period when traditional lenders retrench allowing new capital find home within lender market environment where high quality borrowers can find more options among bridge lenders . Trepp reports $60 billion fixed rate loans requiring refinancing higher interest rates & Goldman Sachs reporting over $140 billion floating rate CMBS loans maturing next two years presents risk reward tradeoff likely better than experienced typical cycles so sponsor borrower financing may include bridge loan solution carry into 2025 during second half year according recent CBRE survey returns expected exceed those achieved 2019-2022 periods despite economic uncertainty associated real estate tied multifamily industrial assets delivering higher returns alternative investment classes such as equity REIT’s & public stocks/bonds making it favored class certainty amidst volatility found financial markets today .
Connect Texas Multifamily 2023 will take place Aug 22nd Virgin Hotel Dallas – click here more information register
