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:
- 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
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.