SAN DIEGO—As the market continues to expend and reach toward the peak of the cycle, banks have begun to develop more creative financing solutions to maintain market share as competitors from various capital sources become more prevalent. Those thoughts were according to panelists at a morning breakout session at MBA's CREF/Multifamily Housing Convention and Expo 2018.
Bankers representing different markets and risk appetites got together Monday morning to talk about ways they are sourcing business and how they are providing funds in today's competitive market.
According to Chris Niederpruem, managing director of CIT, the overall size of the market has been active. “Lenders have been active,” he said. There has been increasing financing across the board in almost every property type, except for retail, he explained, which fell off last year. “All of this has been done in a fairly disciplined market. The qualitative measures are improving.”
For panelist Doug Faithfull, EVP and chief lending officer at Cambridge Savings Bank, the appetite also continues to be very strong. In Boston specifically, the market is healthy and “we plan on being as aggressive as we can be going into this year, but we do maintain our credit standards and try to not let that get eroded.”
Faithfull explained that his biggest issue has been run off. “A lot of our borrowers that are traditional long-term holders have sold off. We do a lot of construction lending in the multifamily housing space and we have a lot of run off there.”
Kathleen Farrell, head of commercial real estate business at SunTrust Bank, explained that her bank is looking to originate new business and work hard to increase the bank's overall loan portfolio in the coming year.
“We are fortunate that we are diversified since many of the construction loans are running off. We also plan to be very active in the Fannie/Freddie origination business. We are also seeing an uptick in construction and we have been very active there…that had slowed down a bit in 2016, but we are seeing an increase,” she said.
Niederpruem's view was that if CIT can grow its portfolio, it will, but the challenge, he said, is the competition in the space. “We do quite a bit of construction and we are seeing a lot of requests on that today.”
So who are they losing deals to? Most of the panelists said it is to funds. “In the past 12 to 18 months it feels like there is a new fund every couple of weeks,” said Niederpruem. “We are losing some deals. The biggest change that has happened in the last 12 months is that their pricing has dropped. The non-bank lenders are big competition in the space right now.”
Check back in the next few days for more from this panel, including which markets they are lending in and what leverage component might be causing a loss in deals.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
