Heartland Real Estate Business

FEB 2018

Heartland Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Midwest.

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Lender 2018 Insights France Media reached out to leading direct lenders and financial intermediaries from across the region to gain their perspective on the challenges and opportunities in the year ahead, factors most affecting the lending environment, plus the property sectors to watch in 2018. What follows is a compilation of observations from these industry veterans. What is the biggest challenge you anticipate in 2018 as a direct lender or intermediary in commercial real estate? Where do you see the biggest opportunity for your company in 2018? Overall, we continue to be optimistic about the commercial real estate finance market in 2018. While we are clearly later in the cycle and we must continue to monitor potential market disruptors such as rising interest rates, market volatility, and geopolitical risks, there continues to be an abundance of capital for commercial mortgage lending given the strong portfolio performance and relative value of the asset class. Furthermore, tax reform coupled with continued steady job growth should serve as a stimulus for the economy, which bodes well for commercial real estate. Our biggest opportunity continues to be finding ways to add value for our clients by bringing financing solutions to the table. Lenders have deployed a significant amount of capital in recent years. As a result, their programs are changing as they continue to proactively manage their portfolios. Knowing our lenders' programs and leveraging the deep-rooted relationships we've established is critical to creating win-win solutions for our clients. What is your company's lending strategy for 2018? Are there any new lines of business or opportunities that you are pursuing? As a financial intermediary, our business is real estate finance. We are focused on providing innovative financing solutions for our clients. With 29 offices across the country, we can offer our clients a broad array of products across the debt and equity spectrum. Our experienced staff and their longstanding relationships with capital providers enables us to bring competitive financing solutions to the table. What property sector of commercial real estate will experience the most activity in 2018, and why? Despite some signs of moderation, we expect multifamily to continue to the lead the way. Occupancy rates continue to be near record highs, rent growth remains in excess of 3.5 percent on average, and consumer preference to rent and economic tailwinds remain. Most lenders have been overweight on the multifamily sector post-recovery and some are looking to diversify further into other property types. Many lenders have struggled to build their industrial portfolios, so it remains a top priority. Some have pruned their retail portfolios to the point where they are looking to get back in, albeit on a conservative basis. Office remains steady. Student housing, hospitality, and medical office are also drawing more interest given the strong real estate fundamentals, and these property types provide additional portfolio diversification. What advice are you giving your borrowers to help them maximize their lending strategy in 2018? Our advice is to continue to be proactive in managing capital needs and portfolio maturities. As previously mentioned, it's more important than ever to stay in tune with capital availability. Lenders have been very active in recent years and their portfolio concentrations have shifted. While overall performance continues to be strong, many borrowers' needs have changed. Exposure to a broad array of capital and local market expertise is critical to ensuring an optimal execution. Todd A. Harrop EVP – National Director of Capital Markets ADVERTORIAL With 29 offices across the country, we can offer our clients a broad array of products across the debt and equity spectrum. " "

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