CREF Virtual Conference & Lender Meeting Takeaways

Mortgage Bankers Association – CREF Virtual Conference:

Typically held in San Diego each year, the MBA’s CREF conference was a virtual experience this year. Below are Senior Vice President Jeff Glenn’s takeaways from the event:

2020 Overview

• Investment activity fell by 68% nationwide
• CMBS originations fell by 40%
• Unlike the great recession, there were not an overwhelming amount of mortgage delinquencies, as lenders were able to offer borrower’s forbearance
• Retail, hospitality, student housing, and office properties were hit the hardest, while industrial and multi-family properties were unscathed for the most part
• Strip centers performed well, in comparison to big-box retail properties
• The majority of tenants were able to pay rent, including those who worked from home

Fast forward to February 2021 – could it be that there is light at the end of the tunnel?

• Lenders have begun to recoup deferred interest
• Bridge programs will play a large role in helping businesses that have struggled
• CMBS lenders are seeing a strong increase in originations – compared to 2020
• As interest rates remain at an all-time low, the housing market has surged
• Most lenders will continue to place an emphasis on industrial and multi-family properties
• Mortgages will continue to offer investors a strong return compared to bonds
• Hotels in tertiary markets will continue to struggle
• ESG will become a larger focus for lenders. Regulators will be asking about ESG investments and properties positioned as ESG friendly (LEED, green) will see more interest.
• Virtual conferences will become a thing of the past

Jeff Glenn
Senior Vice President
D: 916.565.7487
jeffglenn@slatt.com

Slatt Capital Virtual Lender Meetings:

Additionally, over the past three weeks, Slatt Capital has hosted over two dozen virtual lender meetings to understand allocations and appetite for 2021. Here are some of our top observations:

• All lender types have money, are bullish for 2021, and need to get money out the door.
• Some lenders are starting to look at asset classes that are out of favor to place deals – hospitality, retail, and office. Lenders are still skittish on asset classes that face potential post-COVID demand questions – certain non-essential retail, CBD office. There is a recognition that some of the best loans were made in a down market.
• Recognition of competitive set and what it takes to win deals – lenders are picking their spots and getting more flexible on deal points such as prepay or dollars.
• New borrower/lender relationship building is difficult with travel restrictions in place – lenders are relying heavily on working with existing borrowers or through known trusted advisors.