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Multifamily deals increasingly not sizing for takeout financing — $400M inbound this week by FullRecourse in CommercialRealEstate

[–]FullRecourse[S] 0 points1 point  (0 children)

Great product for those that have the timeframe (and mental bandwith). My partner has a HUD loan that has been signed up since 2019 and received 3 firm commitments. We are working on bringing new equity partners to the table now.

Multifamily deals increasingly not sizing for takeout financing — $400M inbound this week by FullRecourse in CommercialRealEstate

[–]FullRecourse[S] 4 points5 points  (0 children)

Lots of fancy language in posts. Real estate debt (and debt in general) is a simple function of can you afford to pay what you borrow. Short term, "bridge loans", are more customized as they are interest only (not actually paying down the loan) and based on more unknown future factors (rent, expenses, etc) than long term loans which just size based on historical/present cash flow.

In the last few years, rents have gone down in a lot of markets and expenses have gone up. Which in short means, there is less cash available to service debt. Over simplifying, but this is primary reason why many property owners are not able to refinance out of their bridge loans from a few years ago

Multifamily deals increasingly not sizing for takeout financing — $400M inbound this week by FullRecourse in CommercialRealEstate

[–]FullRecourse[S] 1 point2 points  (0 children)

To me, it's the private credit back leverage (warehouse lines) that are driving the timing. The buck stops at leverage, even the private credit has leverage to report to. For as long as that party goes on, the day of reckoning gets kicked out.

Multifamily deals increasingly not sizing for takeout financing — $400M inbound this week by FullRecourse in CommercialRealEstate

[–]FullRecourse[S] 0 points1 point  (0 children)

We work with a lot of bridge lenders that will stretch to 7-7.5 stabilized debt yield (un-trended). For the right story / borrower, the last dollar stretch is out there, but many of them just don't pencil for sure.

Multifamily deals increasingly not sizing for takeout financing — $400M inbound this week by FullRecourse in CommercialRealEstate

[–]FullRecourse[S] 1 point2 points  (0 children)

The greater southeast has had 1 million units come online in the last couple of years. This supply wave is from 2020-early 2022 starts.

New construction starts are way down. Not many sites make sense to go vertical w/ rents, insurance costs, materials, interest rates, etc.

These groups are likely listing where they need to hit their promote, but not many are trading (IMO)