Q1 Market Update: Lender Segment Insights

Q1 Market Update: Lender Segment Insights

As COVID-19 has brought on unprecedented market disruptions, we believe it is vital to keep our clients informed concerning the major lending sources in the market. We asked a few of our producers in our LA office to call our lenders and provide insight into how these various lending segments are performing in the market. Keep reading below to find out more:


The Agencies are starting off 2022 with fresh allocations and lofty goals. Both Freddie and Fannie plan to hit their goals by targeting deals with mission-driven credit and providing borrowers with very attractive pricing. Aside from mission-driven deals, agencies will continue to pursue older stock, secondary, and tertiary markets. As the headline risk of covid-related issues has passed, so have the covid-reserves. Tier-4 Garden Variety multifamily product is starting around 3.50%, but pricing can become more attractive for mission-driven deals with a green component, or for repeat customers.

Jacob Lee, Vice President


Banks currently have currently remained competitive through their pricing of coupons. Their rates have not increased significantly but I expect banks to increase their overall coupons in the next 30 days. Banks are currently aggressive on multifamily underwriting, given that their rates are quite low on 5-,7-, and 10-year terms, which we’re seeing around 3.3%, 3.5%, and 3.75%, respectively. Banks can get aggressive on shorter-term loans because they underwrite to a 1.20 debt-service-coverage-ratio (DSCR) and with a low rate like 3.3%, which allows the loan-to-value (LTV) between 65-70% to be reached given the DSCR being low. If we see an uptick in bank rates, we’re going to be constrained by a DSCR rather than an LTV metric which we have historically seen in the last two years.

William DeFanti, Vice President

Credit Unions:

Credit unions have remained active in the current lending market, attracting borrowers with their flexible prepayment penalties for both short and long-term financing. In turn, credit unions find well-capitalized borrowers that meet their global underwriting thresholds to be ideal borrowers. Credit unions are emphasizing growing their multifamily and industrial portfolios while remaining more open to retail assets than other lenders and selective on office assets. Their rates are usually a bit wider than banks, as they like to quote 5- and 7- year terms, usually with a market-rate reset followed by another fixed term. They can usually get up to 65-70% LTV and charge minimal points and fees as most of their process happens in-house and are mostly always recourse.

I was recently quoted a 3.00% rate on a low-leverage, seven-building industrial portfolio, which is a prime indicator that some credit unions can get aggressive for the right deal. The same general parameters will apply to multifamily assets depending on sponsor, location, quality of the collateral, etc. As for retail assets, I’ve seen quotes starting between 3.75% – 4.00%. Credit unions at times can offer longer fixed terms, unconventional structures, or a lower rate for the right borrower. Most often, however, credit unions stay firmly in line with their lending “box” and their general “flexibility” is to manifest with their prepayment penalty rather than complex structure. Oftentimes it boils down to the extent to which the borrower clears the global cash flow underwriting hurdle. Global cash flow underwriting consists of taking a more holistic approach to analyzing the borrowers’ creditworthiness – several years of tax returns & K-1s, financial statements, and schedule of real estate owned are usually of high importance and scrutinized more heavily than what is customary with Life Insurance Companies or Debt Funds.

Jonny Soleimani, Vice President

Debt Funds:

As we move into Q1 2022, debt funds continue to be very active as a good non-bank alternative for borrowers who need to move quickly and are willing to absorb higher rates for the speed and flexibility that these lenders provide. While conventional lenders are aggressively competing on rates for core multifamily and industrial assets, the debt funds seeking yield remain competitive in financing value add and transitional deals for experienced sponsors, as well as performing properties in less favorable asset classes like retail, office, and hospitality. The horizontal organizational structure of many debt funds remains a core competitive advantage that allows them to make quick decisions and get creative to structure solutions that fit with a borrower’s unique business plan.

Debt funds are also a good alternative for developers seeking to maximize their leverage and minimize their need to raise equity. Some funds are winning deals by offering first mortgages with an extra 10-20 basis points of leverage at premium rates. However, those rates end up looking very attractive when compared to the cost of layering in mezzanine financing at double-digit interest rates with additional points or giving up a larger piece of the project’s upside to equity investors. Borrowers seeking nimble construction financing with a streamlined process are also well served by debt fund lenders offering both recourse and non-recourse loans.

David Sarnoff, Vice President


Feel free to reach out to us with any questions or with any opportunities that you would like to discuss with us!



  • This field is for validation purposes and should be left unchanged.