Lenders Increase Leverage to Stay Competitive

LOS ANGELES—This year, there continues to be an influx of private lenders in the market, and these lenders are increasing leverage to stay competitive, according to Alexa Mizrahi, a loan originator at Lone Oak Fund. Mizrahi is speaking on the Inside the Capital Stack panel at the upcoming RealShare Los Angeles conference on March 19, and took a break from her research to share the latest capital markets trends.

“We have seen a large influx of private lenders enter the marketplace,” Mizrahi tells GlobeSt.com. “There is an overwhelming amount of capital chasing deals, so lenders are becoming much more aggressive with pricing and leverage in order to compete. We expect this trend to continue as cap rates continue to compress. Investors can capture higher yields in the private lending space than they can by investing in primary locations at this point in the cycle.”

In line with this trend, Lone Oak, which focuses on commercial properties and non-owner occupied multifamily properties in California, has become more competitive with its requirements. “We've become much more aggressive on commercial properties and entitled, urban infill land,” says Mizrahi. “We are lending 60% LTV on commercial properties that we may have only lent 50% LTV on in the past.”  

This trend shows no signs of slowing down, and according to Mizrahi, capital will continue to be readily available throughout the year, along with low interest rates. “This is a great market for borrowers,” she says, “and lenders will continue to compete for quality loans.”

To hear more of Mizrahi and other capital markets experts, join us at RealShare Los Angeles, on March 19.