Following the pandemic, many lenders paused or slowed lending activity in the face of widespread uncertainty. Next year, lenders are prepared to have capital available to meet borrower needs. With the presidential election in hindsight and the promise of three vaccines coming to market, lenders feel confident in providing healthy capital allocations for the next year.
"Although lenders will likely remain conservative in their underwriting, there will continue to be ample capital sources available in 2021 to meet investor demand," Stephen Stein, managing partner at Tauro Capital Advisors, tells GlobeSt.com. "With election uncertainty fading and promise of a vaccine on the horizon, lenders will remain diligent in their capital allocations for 2021."
It is likely that lenders will focus on those asset sectors that have proven resilient during the pandemic. "Industrial and single-tenant triple-net-lease deals are poised to continue to be in strong demand over the next several years. The multifamily sector is another asset class where lenders see continued opportunity," says Stein.
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On the borrower side of the table, low interest rates alone are likely to continue to drive demand for capital—and deal volumes. "Interest rates are also anticipated to remain at historic lows well into next year, which bodes well for investors and the capital markets. Overall, we anticipate that lending activity and availability of capital will remain strong in 2021," says Stein.
Tauro Capital recently launched a new advisory services platform to guide borrowers through new challenges created by the pandemic. For that reason, the firm is closely tracking lender appetite and lender needs to close deals. "Our goal with this new platform is to make our client's lives easier, especially during a crisis, by providing them with the details of a transaction objectively—whether a new acquisition, development, or refinance," says Stein. "We believe that working with a financial intermediary is like hiring an attorney or an accountant or any other intermediary. Yes, you can fight your court case or do your taxes on your own, but there is tremendous value in bringing in an experienced intermediary who is extremely well versed in the industry."
The firm says that the unique challenges brought on by the downturn have created a need for a specialized advisory services platform. "When you can also bring in a financial intermediary who has a deep understanding of the many other aspects of a project and can act a true advisor to a client it can have a significant impact on the overall financial health of an asset's performance," says Stein. "We have been extremely active over the last several months and plan to continue this momentum over the next year, expanding both this platform and Tauro's financial intermediary services."
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Kelsi Maree Borland
