From the Editor
By Neil Pierson
Find ways to keep deals
flowing as the market slows
If you’re looking strictly at the numbers, 2018 could present fewer investment opportunities for commercial
mortgage brokers and their clients.
The Mortgage Bankers Association, for example, projects commercial and multifamily loan originations in 2018
will stay about the same as last year. That may be disheartening for some in the commercial lending industry,
given 2017 was expected to close out with a year-over-year volume gain of 5 percent in these
loan types. In addition, Trepp, a commercial real estate data provider, expects commercial
mortgage-backed securities (CMBS) to return to earth after soaring 20 percent in 2017, to more
than $95 billion. Trepp projects that U.S. CMBS issuances will decline to about $80 billion in 2018.
The outlook isn’t completely dark, of course. The National Association of Realtors anticipates
vacancy rates to stabilize in the office, industrial and retail markets, and for rent prices to
increase by 2 percent or more in all three sectors. And the hospitality sector should continue to
grow, as the annual supply of new hotel rooms is expected to rise by 2.5 percent in both 2018
and 2019, according to Lodging Econometrics, a hotel-industry data provider.
Our March magazine, with its focus on business development, aims to give mortgage brokers
some big-picture investment strategies and specific paths to close more deals.
Senior housing, when viewed with a long-term lens, may be one of the more profitable
commercial real estate sectors to be involved in going forward. And we have two articles this
month centered on the senior-housing sector, which is expected to thrive over the next few
decades as thousands of baby boomers retire each day.
On Page 31, our lead article from Trace Wilson of PGIM Real Estate Finance explores private-pay senior-housing
facilities. These properties are increasingly evolving to meet modern-day demands. Commercial mortgage
brokers and their investor clients should look into the various options for financing senior-housing construction,
acquisition and stabilization projects, Wilson writes.
On Page 60, KC Peterson of Hunt Mortgage Group provides an overview of one senior-housing financing option
— the U.S. Department of Housing and Urban Development (HUD) 232 loan program — that can provide long-
term funds with favorable interest rates, if your client can provide a significant amount of equity.
Ben Kadish of Maverick Commercial Mortgage Inc. pens an excellent examination of nonbank and out-of-market
financing sources on Page 42. Kadish provides potential solutions for some common dilemmas, such as when
your client is a foreign national, has low liquidity or is investing in an oversaturated market.
Developers and investors want speed, flexibility and nonrecourse-loan options, writes Daniel Palmier of UC Funds.
On Page 77, Palmier says nontraditional lenders may offer these perks, whether your client is working on a Class A
hotel property or a Class C multifamily property.
Gary Bechtel of Money360 also takes a peek at nonconventional financing options on Page 49. Bechtel offers
some insight into the rise of alternative lenders — which take many different names — and how the perfect
storm of technology and regulations have helped these companies grow recently at roughly twice the pace of
traditional commercial banks.
On Page 56, Al Alper of Absolute Logic returns with a third installment about cybersecurity issues that impact mort-
gage professionals. Making sure a client’s private data is secure might not seem like a business-development issue,
but think of the alternative: What happens if your small company gets branded as “risky” because of a cyberattack?
We hope you enjoy this month’s articles, as well as the arrival of spring. Sunnier weather can only help you
develop a sunnier outlook toward the future of your business, right?
Neil Pierson is editor of Scotsman Guide Commercial Edition.
Reach him at (800) 297-6061 or firstname.lastname@example.org.