Like Sammy Hagar trying to replace David Lee Roth as Van Halen’s lead vocalist in 1985, debt funds are seeking to fill the void left as bank lenders have dialed back their leverage levels.
What exactly are debt funds? They are non-bank lenders formed with contributed equity from institutional investors. The debt funds then leverage the contributed equity to create a pool of capital that essentially is outside typical bank regulators’ purview.
Debt funds’ ability to raise capital comes at a time when most institutional capital believes the real estate cycle is getting top-heavy and vulnerable to a correction.
Looking back on the first quarter of 2017, there appear to be very few things that we know with certainty. We do have a new president and there has been – at least in the business sector – a positive “Trump bump” though not as large as had been expected. Going forward, we venture a few ideas:
- Retail – especially the mall variety – has been taking a bruising and rightfully so.
With enthusiasm high in commercial real estate markets, most attendees at a national mortgage bankers convention last month were expecting a party atmosphere.
But the reality was more like a line from the Talking Heads’ song “Life During Wartime”: “This ain’t no party, this ain’t no disco, this ain’t no fooling around.”
This year had a different feel. Missing were the grandiose loan volume goals that many conduits roll out every February.
If current capital markets exuberance for the new administration is any indication, 2017 could be huge for commercial real estate.
While 2016 was a terrific year, it didn’t quite live up to 2015’s amazing standards.
Despite a spike in interest rates during the last few months of 2016, 2017 is starting off with great promise as inflation is the word around Wall Street and real estate is viewed as a good hedge.
As published in the Richmond-Times Dispatch on December 5, 2016.
The Windsor Business Park in Henrico County sold Friday for nearly $33.3 million to a Maryland-based commercial real estate owner and operator along with a local investment group.
The property, one of the largest business parks in the Richmond area, was acquired by Fernau LeBlanc Investment Partners and an affiliate of John B. Levy & Co., a Richmond based real estate investment firm.