Forum Spotlight: Portfolio Lenders
February 27, 2023
Together, Stefanie, Chris, Michael, Jonathan, Scott and Lissette form the Leadership Working Group for CREFC’s Portfolio Lenders Forum. Importantly, this group sets the agendas and priorities for the Forum, as well as represents their constituencies on CREFC’s Policy Committee.
Key Portfolio Lender Focus Areas
- Valuation and Rates: Declines in valuation, higher interest rates and more disciplined underwriting (moderate rent growth and increased expenses). Higher rates and tighter coverage have led to more CM2 business across the board
- Lending Pipeline and Appetite: More capital available than second half of last year but volume still down. Transactions are limited due to the delta between sellers and buyers. Less interest rate volatility should help increase transaction volume.
- Asset Management: Maturing transitional/bridge loans are facing refinance risk (increased cap costs, tight DY and DSCR metrics that don’t allow for a perm takeout). Office will have a hard time with little liquidity in the market and multifamily will see some hiccups as well as syndicated borrowers aren’t able to write the checks required for the pay down or extension costs.
What they're saying: Conversations at CREFC’s January conference focused on the availability and appetite of various debt capital sources (such as CMBS, GSE’s, debt funds, life companies and banks), and the impact of higher rates on risk ratings of loans in the portfolio and overall portfolio risk.
Key Policy Issues:
- Regulatory framework for ESG and climate change compliance and reporting
- Bank Capital Review
- SEC Climate Reporting
- Beneficial Ownership Reporting
- Multifamily reporting requirements under Home Mortgage Disclosure Act (HMDA)
What's next: Forum leaders are seeking nominations for the next Chair Elect to join their leadership slate and look forward to presenting CREFC members with an update on their forum at the Annual June Conference in New York City.