Portfolio Lenders Forum Spotlight
October 17, 2022.
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
- Regulatory considerations and muted capital markets activity pressuring bank balance sheets, along with CRE allocation or other loan book size constraints.
- More disciplined underwriting (increasing expenses and cap rates) coupled with higher interest rates (heightened emphasis on rate sensitivity analysis) and declines in valuations across the board.
- Escrows (taxes and insurance for example) that were once waived due to low leverage are back as a result of lower valuations and DSCRs.
- Credit focus shift towards the office sector, with increasing delineation between the ‘haves’ and ‘have nots’.
- ESG-linked financings are increasingly a focus for both borrowers and lenders.
Looking ahead: Due to the uncertainty in the capital markets, asset managers are looking ahead to avoid maturity defaults on maturing bridge debt. From a portfolio management perspective, lenders are examining office concentrations as well as transactions that no longer hit DSCR targets in the current rate environment. Refinancing comes at a high cost with a principal paydown, fees and high cap costs. Those borrowers looking to sale as an exit no longer have certainty of execution.
What’s Next? Forum leaders are planning a virtual forum-wide legislative and regulatory policy update and will soon be formulating the agenda for the forum session at CREFC’s January conference.
To join the Portfolio Lenders Forum, please register here. For any forum related questions, please contact Kathleen Olin at firstname.lastname@example.org.