2018 MBA CREF Conference Insights

The annual Mortgage Bankers Association Commercial Real Estate Finance conference, held last week in San Diego, always provides overall direction on lending trends from life insurance companies, CMBS and bridge firms, GSEs and banks. The following are a few take-aways from NorthMarq to help you plan your commercial real estate finance needs in 2018.
  • Money is Plentiful - We don't recall meeting a capital source saying they were paring back their program. The result is spread compression, particularly as the underlying base rates (Treasury and LIBOR) have risen.
  • Long and Short Money - Many life companies expressed a desire to "go long" and place loans way past 10 years on the books to achieve duration. Most seem flexible in prepayment structures to alleviate borrower concerns of being locked in seemingly forever. Conversely, bridge programs (both in debt funds and inside big insurers) are a popular way to try and hit yield targets on the short end, so those programs are available and expanding.
  • CMBS Market - Adapting to risk retention in 2017, the CMBS firms have quietly found their stride in the current market with higher leverage loans and deals the life companies pass over, particularly retail properties. We are down to 17 shops who contributed more than $1 billion to the industry last year. Our preferred lender programs are working as planned, and as each lender desires more business, we have tightened our relationships. Look for many to roll out some on-book programs in an attempt to capture transitional assets that can roll into CMBS when lease-up or work is done.
  • MBA - The MBA, as an organization, is very healthy and active. In 2017, it was quite involved with Congress on tax reform and helped retain business interest deductibility for real estate, as well as Section 1031 like-kind exchanges for real property, which helps ensure the cost of financing remains affordable and real estate activity remains a vibrant portion of the economy. For 2018, the MBA is actively involved with the legislation being proposed to end the government conservatorship of Freddie Mac and Fannie Mae with the goal of continuing the positive elements of the industry while lightening taxpayer responsibility.
  • NorthMarq Capital - More and more, our company is differentiated from our larger rivals in a positive way for our professionalism and commitment to our relationships versus the transactional nature that exists in some other shops. We like this for the long term. In the near term, we will continue to enhance our life company relationships while building our business with the GSEs to leverage our experience and strong national platform of offices.
If you are interested in learning more about any of these perspectives, please reach out to one of our regional offices today.