MIAMI—What types of investors are in the best position going into 2014? Will large institutions continue to lead the financing charge? Will competition among lenders heat up? We caught up with four industry leaders in the thick of the fray to get their capital markets predictions for 2014.
Matthew L. Adler, president and CEO of Adler Kawa Real Estate Advisors, tells GlobeSt.com he began to see a broadening in capital allocation in 2013 and that trend should continue this year. Multifamily assets have been in high-demand for the past few years, and capital is now beginning to seek yield in other asset classes, he says, most notably the office, industrial, and retail sectors.
“Investors with a consistent strategy and strong operations are in the best position to succeed when it comes to raising capital and securing financing,” Adler says. “For example, Adler Kawa focuses on acquiring multi-tenant business parks in growth markets in the eastern and southern US.”
With all this in mind, Adler Kawa focuses on management intensive properties with a mid-market transaction size. Adler says this approach has helped the joint venture identify strong acquisitions, raise its second fund and secure favorable loan terms for a number of acquisitions in recent months: “We are entering 2014 with a significant amount of discretionary capital that will be allocated for assets that satisfy our yield-oriented model.”
Jim Fried, director of Investments for Mayan Properties, tells GlobeSt.com large institutions have long been the most prominent source of financing for new development. He predicts we’ll continue to see those lenders on the frontlines when it comes to committing capital for trophy assets.
“More and more, we’re seeing high net worth individuals and family offices gravitate toward direct equity investments in ground-up developments,” Fried says. “Many of these investors are seeking long-term capital preservation, so they are most interested in hotels, multifamily apartments and retail shopping centers that generate steady returns over time.”
Jim Shindell, partner with law firm Bilzin Sumberg and head of the firm’s Real Estate Group, tells GlobeSt.com lenders will continue to compete to lend on well-located projects with top-notch sponsors in the near-term. Second tier projects may have some difficulty finding financing on suitable terms, he says: “Strong condo developers will be able to find financing as long as there is sufficient influx of international dollars to support the current deposit structure, although lenders will keep a weather eye out for signs of overbuilding in various sub-markets.”
Gavin Campbell, managing principal of Steelbridge Capital, tells GlobeSt.com this year will see the largest amount of office investment sales offerings since the 2007 peak. “Owners who have been trying to thread the needle of waiting long enough to take advantage of the leasing recovery while still selling into an environment of low interest rates are finally going to push the sell button as Fed tightening begins in earnest,” he says. “This will be true nationally as well.”