SAN DIEGO—Bank lending is more of a factor in commercial mortgage banking since the recovery began. That is according to panelists during the “Concentration, Construction & Competition: Banks and Their Evolving Market Role” panel here at MBA's CREF/Multifamily Housing Convention and Expo 2017.
The Monday concurrent session marked the beginning of Day 2 of the convention. “Low interest rates, long-terms loans, non-recourse terms and other features have made bank lending appealing to borrowers,” said panelists.
Moderator Angela Mago, EVP of KeyBank Real Estate Capital, kicked things off by noting that we are “setting some precedence in today's market” in terms of numbers, a view also expressed by economists during the convention's opening session on Sunday.
“If you look at historic mortgage rates, they are at record lows. Our NOI's have been trending up and have been exceeding prior peak, and property prices are higher than prior peak in all asset classes except for suburban office,” she said.
Last year was a strong healthy year, she said. “Maturities really peaked in 2016. Things will still be robust in 2017.”
Gregg Gerken, EVP and head of US commercial real estate at TD Bank Commercial, said that rates will probably start to head up. “We have seen record low cap rates and that has probably been driven by the flow of capital trying to find a safe place to invest. But there are a lot of positives that suggest that 2017 will be what 2016 was.”
For TD Bank, Gerken said that they have had a record year. “When you look at where multifamily is in a lot of markets, there is a probably a demand/supply balance that has to be reached,” he said. “We have been pretty optimistic about things in the sense that this has been a jobs based recovery and there doesn't appear to be a bubble being created. The prospects are good and the fundamentals have stayed strong.”
Daniel J. Mullinger, EVP of the western region at PNC Real Estate, also has an outlook for 2017 that is a repeat for 2016. “2017 still provides plenty of opportunity out there, but it is getting tougher to pick your spots,” he said. “There is a lot of noise in some sectors.”
Mullinger pointed out that industrial has been great, but says that market has been tight.
Relative to administration changes, Mullinger said it is a wait and see attitude for PNC. “There are some things on the tax side that can really change things such as being able to deduct interest, but it is too early to say what is going to happen,” he said. “But the market feels like it will help the banks.”
Panelist Jeremy R. Starkey, president of commercial real estate finance at TowneBank, said that his firm has been preparing since 2011 to be more heavily regulated. “Since 2011, we have proactively put into place a semi-annual stress testing for our commercial real estate portfolio.”
Starkey noted that they look very carefully at the asset class concentrations. “We want to be an acquirer and we have a tremendous amount of growth potential.”
Keep checking back with GlobeSt.com for more live coverage from the MBA CREF/Multifamily Housing Convention and Expo 2017 here in San Diego.
SAN DIEGO—Bank lending is more of a factor in commercial mortgage banking since the recovery began. That is according to panelists during the “Concentration, Construction & Competition: Banks and Their Evolving Market Role” panel here at MBA's CREF/Multifamily Housing Convention and Expo 2017.
The Monday concurrent session marked the beginning of Day 2 of the convention. “Low interest rates, long-terms loans, non-recourse terms and other features have made bank lending appealing to borrowers,” said panelists.
Moderator Angela Mago, EVP of KeyBank Real Estate Capital, kicked things off by noting that we are “setting some precedence in today's market” in terms of numbers, a view also expressed by economists during the convention's opening session on Sunday.
“If you look at historic mortgage rates, they are at record lows. Our NOI's have been trending up and have been exceeding prior peak, and property prices are higher than prior peak in all asset classes except for suburban office,” she said.
Last year was a strong healthy year, she said. “Maturities really peaked in 2016. Things will still be robust in 2017.”
Gregg Gerken, EVP and head of US commercial real estate at TD Bank Commercial, said that rates will probably start to head up. “We have seen record low cap rates and that has probably been driven by the flow of capital trying to find a safe place to invest. But there are a lot of positives that suggest that 2017 will be what 2016 was.”
For TD Bank, Gerken said that they have had a record year. “When you look at where multifamily is in a lot of markets, there is a probably a demand/supply balance that has to be reached,” he said. “We have been pretty optimistic about things in the sense that this has been a jobs based recovery and there doesn't appear to be a bubble being created. The prospects are good and the fundamentals have stayed strong.”
Daniel J. Mullinger, EVP of the western region at PNC Real Estate, also has an outlook for 2017 that is a repeat for 2016. “2017 still provides plenty of opportunity out there, but it is getting tougher to pick your spots,” he said. “There is a lot of noise in some sectors.”
Mullinger pointed out that industrial has been great, but says that market has been tight.
Relative to administration changes, Mullinger said it is a wait and see attitude for PNC. “There are some things on the tax side that can really change things such as being able to deduct interest, but it is too early to say what is going to happen,” he said. “But the market feels like it will help the banks.”
Panelist Jeremy R. Starkey, president of commercial real estate finance at TowneBank, said that his firm has been preparing since 2011 to be more heavily regulated. “Since 2011, we have proactively put into place a semi-annual stress testing for our commercial real estate portfolio.”
Starkey noted that they look very carefully at the asset class concentrations. “We want to be an acquirer and we have a tremendous amount of growth potential.”
Keep checking back with GlobeSt.com for more live coverage from the MBA CREF/Multifamily Housing Convention and Expo 2017 here in San Diego.
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