This Is As Good As It Gets to Be a Borrower

LOS ANGELES—With the cheap cost of capital, a pro-deregulation administration and long-term interest rates forecasted to remain between 4% and 5%, it is a really good time to be a borrower—according to speakers on the What to Expect for Capital Markets Under the New Administration panel at RealShare Los Angeles this week. Panelists Michael Klein, principal and CEO of Freedom Financial Funds; Mark Strauss, managing director of Walker & Dunlop; Noah Streit, president of Streit Lending; Gary Tenzer, principal and managing director at George Smith Partners; and moderator Michael Derk, SVP of capital markets at Institutional Property Advisors discussed how the new administration might affect the capital markets.

“There is the possibility of some deregulation,” Tenzer said on the panel. “I don't know if they are going to get that accomplished, but if they do, it will be a good thing for business.” Streit agreed, adding,” I think you will see lessening of Dodd Frank and decreased lending from institutional banks.” There are also promises to homeowners that things will get easier as a result of reducing some regulations. “In the ling term we are still bullish and we think there is room for growth,” he added

However, deregulation might not mean much for California borrowers, since the state is a heavily regulated environment. “The counter point to that is that we are in California, and there is more talk of adding new regulation on the local level,” said Klein. “Our council people and mayor are doing a great job of making it more difficult. We are talking about apartments that are costing 450k to build. In any other part of the country, that would be a mid-range house.”

Regulations aside, all of the panelists had a positive outlook on the year ahead. Tenzer expects interest rates to stay in a normal range, with long-term rates in the 4% to 5% range. He added that supply and demand was imbalance and the markets are strong, so he doesn't expect an oversupply issue this year. On construction lending, regulators have forced banks to slow construction lending; however, that has created tremendous demand for hard money construction loans, and it has opened up a marketplace for mezzanine lenders, according to Strauss.

LOS ANGELES—With the cheap cost of capital, a pro-deregulation administration and long-term interest rates forecasted to remain between 4% and 5%, it is a really good time to be a borrower—according to speakers on the What to Expect for Capital Markets Under the New Administration panel at RealShare Los Angeles this week. Panelists Michael Klein, principal and CEO of Freedom Financial Funds; Mark Strauss, managing director of Walker & Dunlop; Noah Streit, president of Streit Lending; Gary Tenzer, principal and managing director at George Smith Partners; and moderator Michael Derk, SVP of capital markets at Institutional Property Advisors discussed how the new administration might affect the capital markets.

“There is the possibility of some deregulation,” Tenzer said on the panel. “I don't know if they are going to get that accomplished, but if they do, it will be a good thing for business.” Streit agreed, adding,” I think you will see lessening of Dodd Frank and decreased lending from institutional banks.” There are also promises to homeowners that things will get easier as a result of reducing some regulations. “In the ling term we are still bullish and we think there is room for growth,” he added

However, deregulation might not mean much for California borrowers, since the state is a heavily regulated environment. “The counter point to that is that we are in California, and there is more talk of adding new regulation on the local level,” said Klein. “Our council people and mayor are doing a great job of making it more difficult. We are talking about apartments that are costing 450k to build. In any other part of the country, that would be a mid-range house.”

Regulations aside, all of the panelists had a positive outlook on the year ahead. Tenzer expects interest rates to stay in a normal range, with long-term rates in the 4% to 5% range. He added that supply and demand was imbalance and the markets are strong, so he doesn't expect an oversupply issue this year. On construction lending, regulators have forced banks to slow construction lending; however, that has created tremendous demand for hard money construction loans, and it has opened up a marketplace for mezzanine lenders, according to Strauss.