NEW YORK CITY—The commercial lending market will be rife with opportunities, but investors as well as lenders likely will face a slight change in attitude this year.
In fact, contends Steven Fischler, a former executive with Lehman Brothers and founder and president of SRF Ventures, caution may be the industry's watchword in 2016.
"I think you are going to see lenders and investors a little more cautious than the last few years," he predicts. "As we move through the cycle, while asset prices have increased considerably, lenders and investors will not be as aggressive in lending or assuming rent growth or condo sales price growth as they have been."
"There also are billions of dollars of loans maturing that were originated in 2006 and 2007 (peak of last cycle) that need to be refinanced that will create lots of opportunities for lenders," he adds. "So total loan origination should increase, but the terms will be less aggressive that before."
Fischler's prediction of a rise in mortgage lending deals is in lock-step with the views of many commercial and mortgage lending professionals.
According to a recent survey by the Mortgage Bankers Association, lending professionals expect lenders' and borrowers' appetites for new loans to remain strong in 2016.
A full 90% of the top firms expect originations to increase in 2016, with 50% expecting an increase of 5% or more, and almost two-thirds (61%) expecting their own firm's originations to increase by 5% or more.
"Commercial mortgage lenders anticipate another competitive year in 2016 as lender desire to make loans remains strong," says Jamie Woodwell, MBA's VP for commercial real estate research. "With strong market fundamentals and the 10-year loans made during 2006 and 2007 maturing this year and next, lenders also anticipate strong demand from borrowers."
SRF Ventures' Fischler reports the lending sector was very active in 2015. He notes that his firm arranged or originated approximately $300 million in transactions for clients across the nation in 2015. With last year's results, the firm has arranged or originated more than $1 billion in financing and equity since the company's launch in 2012.
Fischler formed New York City-based SRF Ventures after spending eight years at Lehman Brothers, including three years managing some of the most high profile real estate assets in the Lehman bankruptcy, such as Canyon Ranch Miami Beach and Setai South Beach, also located in Miami Beach, FL.
Some of the noteworthy fourth-quarter transactions arranged by SRF Ventures include a $35-million condo inventory mortgage in Miami, FL, a $27-million land loan in Miami, FL, a $9-million mortgage on a retail property in Miami Beach, FL and an $8.8-million mortgage on an office building in Indianapolis, IN.
During the fourth quarter of 2015, SRF closed a variety of small balance loans starting as low as $1.3 million in value. The loans were used to underwrite numerous property types including land, multifamily, condo development and retail, company officials say.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to asset-and-logo-licensing@alm.com. For more inforrmation visit Asset & Logo Licensing.
