MIAMI—Capital seems to be flowing from just about everywhere, according to Marc Suarez, senior vice president of Hunt Mortgage Group. In part one of this exclusive interview, Suarez took us inside the capital stack. In part two, he's taking us deeper with insight into where the money is going and what capital works better where.
Suarez will be among the panelists at RealShare Apartments East on Wednesday, but we caught up with him to get his thoughts on the capital markets in this exclusive pre-conference interview. Suarez will sit alongside Walker & Dunlop's Paul Ahmed, Aztec Group's Jim Fried, Magic Properties & Investments' Steven W. Moreira and moderator Tim O'Connor, president and regional manager for NorthMarq Capital, in a panel called Under Pressure: Inside the Capital Stack.
GlobeSt.com: What is the money targeting?
Suarez: The money continues to target IRR returns in the high teens which means investing in value add deals. The consensus is there is more money than deals at these return levels so you are starting to see more investment in the newer class A space at lower returns but with better locations in markets and less deferred maintenance and market rent risk.
GlobeSt.com: Are there certain strains of capital better for certain deal types?
Suarez: Yes, and this keeps evolving as competition continues to in the marketplace. We are seeing construction mezzanine that we are participating in, as it is less expensive than equity and a space where groups like ourselves are willing to play in that space of the capital stack as we understand the different aspects of development and management. This provides a great source for developers looking to take on less equity.
GlobeSt.com: How is the uncertainty over the future of the GSEs and the injection of fresh and alternative sources of capital changing the market?
Suarez: I have not seen the GSEs waiver and continue to outperform other debt alternatives and deploy new products into the market. First time GSE borrowers are eager to take advantage of the different products and it's flexibility and repeat borrowers understand the process and the benefits as they continue to take advantage of this interest rate environment.
Since we opened the Miami Hunt office late last year we have had more traditional bank clients pursue us and engage inquiring about our products and process. This was the intent and it is already paying off and exceeding expectations for ourselves and our clients.
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