How commercial real estate investors can find confidence during uncertain times

By Dave Kotter | AZBigMedia

If you ask anyone right now, what is going on, their general response is, “we are still trying to figure it out.”  This is a time where things are shaky and there is a sense of uneasiness floating in the air for commercial real estate investors, given the coronavirus crisis.  My hope is to offer some clarity on what is going on in commercial real estate markets and provide some practical wisdom on how you should move forward.  I will highlight every segment of the market, from a lending perspective.

CMBS (Commercial Mortgage Backed Securities) Markets

This is an area of lending for investment property loans from 2 to 100 million in size.  The format here is book the loan and then bundle them up to sell off as a securitization.  What makes this most challenging right now, is how tied they are to the stock market; which seems to be in disarray.  Every group is more than likely going to widen spreads (raise rates) and probably lower the loan to value.  Furthermore, you are going to see a consistent move away from the hospitality sector.  Along with this you will see closings taking longer, as due diligence travel is going to slow down.  Chances are the markets are going to force lenders to re-trade the original terms. 


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April 2020