News

Forum Spotlight: Portfolio Lenders

October 24, 2023

Together, Scott, Robert, Jonathan, Chris, Kevin, and Stefanie 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 valuations and loan risk ratings continue, due to higher interest rates, disciplined underwriting, and challenging market fundamentals.  Increasing operating expenses, particularly insurance and real estate taxes, continue to impact more asset classes and submarkets.

• While the largest value declines are in office, declines in trading activity across all property types make valuation difficult in many markets. Loan sales and CMBS markets are providing insight on value and pricing.

Lending Pipeline and Appetite. Despite the slower pace of rising rates, the market continues to adjust to expectations of ‘higher-for-longer’ rates.

The result:

• CRE transaction and lending volume are likely to remain muted. 

• Floating- and short-term fixed-rate loans remain the most attractive products to borrowers in the current environment.  

Asset Management. Maturing loans are facing refinance risk from increased cap costs and tight debt yield and DSCR metrics. 

• Liquidity constraints in the debt capital markets, combined with borrowers’ reduced willingness and ability to invest capital, requires incumbent lenders to face difficult choices.  Health of the CMBS market remains important to the industry, as it’s the only source of takeout debt in some cases.

Capital Markets:  Members are monitoring stress in the banking sector closely, given dependence on banks for a fully functioning marketplace and sensitivity of the sector to interest rates. 

What They’re Saying: Conversations at CREFC’s June conference focused on both macro-economic considerations and micro matters affecting the availability and appetite of banks and insurance companies to make loans, including the:

• Regulatory environment,

• Balance sheets, and

• Capital treatment.

Mortgage-loan exposure often presents lower relative value versus liquid CRE investments, while long-term loans are difficult to source.

Key Policy Committee matters:

• SEC’s C&DI Letter regarding timing of filings

• Bank Capital Requirements

• SEC Climate Reporting

• Beneficial Ownership Reporting

• NAIC Ratings

• Fed Guidance

• FDIC monitoring

What's Next? Forum leaders look forward to presenting CREFC members with an update on their forum at the Annual January Conference in Miami. Soon after, the chairs will seek nominations for the next Chair Elect to join their leadership slate.

To join the Portfolio Lenders Forum, please register here.  For any forum related questions, please contact Kathleen Olin at kolin@crefc.org. 

Contact

News Archive

News

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

1. Regulatory considerations and muted capital markets activity pressuring bank balance sheets, along with CRE allocation or other loan book size constraints.
2. 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.
3. Escrows (taxes and insurance for example) that were once waived due to low leverage are back as a result of lower valuations and DSCRs.
4. Credit focus shift towards the office sector, with increasing delineation between the ‘haves’ and ‘have nots’.
5. 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 kolin@crefc.org. 

Contact 

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.

News Archive

News

CREFC Portfolio Lenders Forum

March 21, 2022

Meet our leadership team:

Insurance Company Lenders Sub-Forum

CHAIR	CHAIR-ELECT	PAST-CHAIR
Michael Cale Co-Head Debt Investments Allianz	Stefanie Stewart SVP – Real Estate Finance Voya Investment Management	Eric Becher Managing Director /Portfolio Manager - Debt New York Life

Bank Lenders Sub-Forum

CHAIR	CHAIR-ELECT	PAST-CHAIR
Lissette Rivera-Pauley Credit Products Team Manager - Income Property Finance, Senior Vice President Regions Bank	Jonathan Salzinger Director,Real Estate Corporate Banking Bank of America	Sylvia O’Neill Associate General Counsel and SVP Bank of America

Together, Michael, Stefanie, Eric, Lissette, Jonathan and Sylvia 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.

Portfolio Lender Forum conversations at CREFC’s January conference covered an array of topics from business operations to market focus. Internal to many lenders’ businesses, they are discussing how best to hire and train personnel to move up the ladder, how best to manage office space and potential hybrid flexibility and when people are in the office, and how to make the most of it to collaborate.

Externally, lenders are seeing much competition, especially with private equity firms acquiring insurance firms. Lenders are focused on maintaining strong credit quality and developing heightened ESG lending and reporting.

Additionally, these recent policy issues are of interest for Portfolio Lenders:

• ESG
• Home Mortgage Disclosure Act (HMDA) reporting
• CFPB’s 1071 Small Business Reporting
• FinCEN’s Anti-Money Laundering in Real Estate ANPR
• Community Reinvestment Act (CRA) Revisions

Seeking Forum Leaders for the Upcoming Term. Forum leaders are currently considering nominations for the next incoming chair to join their leadership slate and formulating the agenda for the forum session at CREFC's Annual Conference in June.

Contact

News Archive