In these unprecedented times the lending landscape is changing on a daily basis. The lending appetite across all product types has been ebbing and flowing. Some lenders still see this as an opportunity to lend as others are pulling back to a wait and see situation.

Please see below for a quick summary of lending activity under current market conditions. If you have any additional questions and would like to speak further, please feel free to reach out to our Capital Services Team at your earliest convenience.

Small Business Administration

The Small Business Administration was recently backstopped by a $2T stimulus bill which has been funded to continue the flow of credit down to small business owners (fewer than 500 employees) through the Paycheck Protection Program (“PPP“). Typical payroll items include: salary, wages, cash tips or equivalents, payment for regular leaves of absence, dismissal or separation compensation, group health insurance payments, retirement benefits payments, and some state/local payroll taxes.

After the unprecedented stimulus package passed by the Government, SBA lenders have been more active than ever. Between your traditional owner-occupied loans and the new Paycheck Protection Program (PPP), which allows business owners to borrow up to $10MM to cover payroll expenses, SBA lenders have never been more active.

PPP applications are now open. For more information, please reach out to our Capital Services team.

Bridge Lending Update

Debt Funds ($10 million+)

Debt funds, typically those who compete for opportunities over $10 million on a non-recourse floating rate basis are still lending. Historically, these funds would lend against a business plan to deliver higher leverage but have recently tightened underwriting standards. These lenders are currently lending across all asset classes but limiting exposure to hospitality and retail.

Private Lenders

Private lenders with discretionary family office capital or committed capital through a fund are still actively lending and quoting new deals. That being said, due to the illiquidity in the permanent lending space, many private lenders are quoting much stronger deals than before including but not limited to partially and fully cash flowing bank quality deals.

These institutions can still close loans in under 30 days.

Development

There is still capital available for construction financing, although both balance sheet and private lenders have pulled back on leverage. Once the ban on non-essential construction is lifted, we expect lenders to become more aggressive on these types of loans.

Land

Land has become increasingly difficult to finance, especially if unentitled/unapproved. If there is a fallback plan (such as a warehouse that can be occupied short term) there is some capital available to finance these assets.

Perm Lending Update

Balance Sheet

National and regional banks are still in the market for what they consider stronger asset classes (multifamily or industrial) and are moving away from weaker asset classes (hospitality & retail). These banks are still considering cash out refinances but due to the COVID-19 shutdown, many lenders are requiring 6-12 month principal and interest reserves at closing.

Agency Debt

Fannie Mae, Freddie Mac, and the FHA are still lending against multifamily real estate. In the last month, they have experienced a record number of loan applications which has caused their underwriting parameters to tighten slightly but new originations are still being funded through a seemingly unlimited amount of government buying power in the secondary market for agency mortgage backed securities.

CMBS Market

The CMBS market is currently in a holding pattern due to a dislocation in pricing on new securities versus the spread required by bond investors in the secondary market. While this market stabilizes, it has forced lenders to reprice deals currently in process. Until activity in the secondary market picks up, we do not expect CMBS to be an effective outlet for most commercial real estate borrowers except for low leverage, very well located assets.

While the current environment is choppy, we still have relationships with lenders who are offering 30 year self-amortizing loans, no income verification, no prepayment penalties, etc. available nationwide.