Who’s Lending for What
Here’s a breakdown of which lending sources are most popular by different property types.
Part of MSCI’s periodic capital trends report is a look at what financing sources are most active for different property types.
Overall, the breakdown by lender type in 2023 was fairly close to that of 2022 with the exception of a significant increase in government agency funding from 19% to 26%. But that shift was closer to the 2015 to 2019 average of 23%. Also, regional and local banks went from 29% to 26%. But that was still far higher than the pre-pandemic average of 17%.
Even with much tighter underwriting standards, when it came to office, regional and local banks were responsible for 37% of the lending. They did 33% of the lending for industrial, 35% for retail, 36% for hotels, and 37% in senior housing. The only area where they were involved much less was in multifamily, offering 13% of the financing.
National banks had a presence in all categories but weren’t the largest in any single one property type. They were 12% each in office, industrial, and retail; 8% in hotel; and somewhat less in senior housing.
International banks were 13% in office, 9% in hotels, and less in the other categories.
The biggest areas for insurance companies were 11% in office, 24% in industrial, and 13% in retail. Other areas didn’t register actual percentages.
There were only two areas where government agencies had a significant presence. That was 58% in apartments and 29% in senior housing.
CMBS showed up as 12% of offices, 11% of industrial, 25% in retail, 21% in hotel, and some unlisted percentage in multifamily. They didn’t appear in senior housing.
Investor driven were 12% of office, 10% of industrial, 17% in hotel, and 13% in senior housing, with unlisted amounts in multifamily and retail. And private/other were in all product categories, but as small percentages not listed.
Government agencies offered 2023 loan averages of $18.9 million with average LTV values of 60.5%. For CMBS, it was $21.7 million average loan size and LTVs of 55.7%. International banks were $16.7 million at 62.1% LTV. National bank deals were $12.9 million at 62.6% LTVs. Regional and local banks had the smallest average loans of $6.6 million, with LTVs of 66.4%. For investor-driven, it was $16.3 million and 68.3% LTVs. Finally, insurance companies did $20.0 million deals at 58.9%.