At the onset of the pandemic more than three months ago, thecapital markets instantly froze amid extreme market uncertainty.Today, some of the dust has settled—although uncertainty remainsthe primary market characteristic—and the is pent up capital andmany lenders actively lending on new deals.

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"One of the major misconceptions about the capital markets rightnow is that there is a lack of available capital," StephenStein, managing partner at Tauro CapitalAdvisors, tells GlobeSt.com. "In reality, there is pent-upcapital and lenders interested in providing loans right now. Thecapital markets have certainly not been shielded by the impacts ofCOVID-19 and some lenders are being a bit more conservative intheir underwriting. That said, there are still a tremendous numberof capital sources available with lenders who are currentlyunderwriting deals across all property types with the exception ofhospitality."

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In addition to lender activity, this has also proven to be agood time for borrowers to secure debt for the right deal."Interest rates remain historically low creating a strong appetiteby investors for refinancing," says Stein. "Many deals underwrittenseveral years ago with much higher interest rates are starting tomature. In the current environment, sponsors are able to takeadvantage of these historically low rates to restructure theirfinancing for long-term success."

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One of the drivers behind this misconception is that therecession is like the 2008 financial crisis. However, the dynamicsof this market dislocation are much different. "The 2008 financialdownturn was actually much different as it originated in the realestate market. Prior to COVID-19, the fundamentals within the realestate sector were strong. Therefore, we are confident that we willsee these rebound, especially now as the economy has started tore-open," says Stein.

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In addition, the Fed and government response to this pandemichas been much quicker, and they have used many of the same toolsfor the recovery as in the 2008 financial crisis. "The Fed alsotook a very proactive approach to addressing the pandemic, whichhas been positive for the capital markets," says Stein. "In March,the Fed quickly lowered interest rates followed by several othermeasures such as the $2.3 Trillion Cares Act to support the capitalmarkets and maintain liquidity."

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Internally, Tauro Capital has seen an increase in deal flowsince the start of the pandemic, illustrating the initial marketpause before lenders began processing deals again. "Our team isconstantly nurturing and expanding our lender relationships so wealways know where the capital is and how to access it, says Stein."Every week up to three lenders present to our entire team in thecompany's Tuesday pipeline meeting providing real-time information.These presentations are detailed and layout the lenders specificqualifying needs. These presentations have also revealed thatdespite the current environment, lenders are still hungry fordeals."

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The market uncertainty will be a trademark of the market foryears to come, until the coronavirus is really under control.However, the capital markets won't remain on ice for that long."Overall, while there is still uncertainty throughout the sector,and although the short and long-term impacts are yet to bedetermined, we believe there will continue to be a variety ofcapital sources available to meet investor appetite over the nextseveral years," adds Stein.

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.