President and CEO, UC Funds
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Know when to be flexible and lead
clients toward nontraditional lenders
At the start of 2018, commercial real estate lenders and investors are
continuing to make adjustments to marketplace changes caused by
banks have pulled back from commercial real estate lending, steadily
increasing restrictions and contingencies
At the same time, many sponsors — including institutional real estate
investors — have changed their views on lending and are following the
trend of turning to nontraditional lenders For commercial mortgage
brokers, presenting financing options to clients is becoming more
complex In the current climate, you must know when to lead investors
away from banks and toward nontraditional lenders >>
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Mortgage brokers must recognize
the value of multifamily housing, with
commercial real estate capital pursuing
deals in all of its related asset classes.
Given the balanced state of supply
and demand within multifamily, new
products are being absorbed quickly
without over whelming the market.
Individuals from diverse demographics
are attracted to multifamily investments,
and sponsors can bankroll deals for millennials and empty nesters searching
for luxury apartments. Sponsors also
may facilitate purchases of Class B and
C assets, where tenants will often agree
to higher rents in exchange for a better
quality of life.
Of course, lenders continue to chase
office, industrial and retail assets, but
multifamily has led the way into 2018.
As lenders continue to realize flexible
roles for meeting the needs of investors,
opportunities to obtain loans for multi-family assets will remain plentiful. And,
by facilitating relationships between
investors and nontraditional lenders,
you will be extremely likely to successfully secure capital for yourself and
Predicting the future
The industry forecast for 2018 is good.
The multifamily market is expected to
be a top-performing asset class, yield-
ing solid, low-risk returns. Year-over-year
gains are likely, leading to equity in the
market, which is good news for investors,
lenders and mortgage brokers. Borrowers
will continue to see potential in stable
properties, transitional assets, and both
small and large development deals.
It’s possible that 2018 may bring a
certain amount of negative change
as well, whether it be further tightening of bank regulations, rising interest
rates or revenue stagnation. Early in
the year, investors will be more eager
than ever to partner with lenders who
offer flexible terms.
In turn, this will help keep their projects on track and ensure assets stay
profitable in the face of unpredictability.
To keep up with the changing market
and maintain the trust of your clients,
it’s important to educate yourself on
nontraditional lenders and the flexibility
Flexible lenders will always be in demand and are almost certain to grow
as a result of secondary perceived risks
in the market. Brokers should have an
open mind when recommending profitable financing options for clients.
Sponsors are seeing a rising number of
projects come to fruition through deals
with nontraditional lenders.
It only makes sense for commercial
mortgage brokers to point clients in
the direction of nonbank lenders and
to develop strong relationships with
lenders in this category. They might
be your client’s best option for closing
a successful deal. The depth of your
knowledge about the role of nontraditional lenders in commercial real estate
financing will help determine your level
of expertise in the eyes of investors.
n n n
Flexible lending is becoming the new
norm, and you may soon begin to
develop confidence in nontraditional
lending partners that want to execute
transactions and complete deals in a
timely manner. By making yourself an
educated resource on the benefits of
lender flexibility, your value as a mortgage broker will increase tremendously
during 2018. n