CORE Advisory Partners

MARKET UPDATE The commercial real estate capital markets/lending environment has become more challenging for sponsors as investors and lenders seek perceived higher-quality opportunities with more attractive risk-adjusted returns.  Rising interest rates (which affect the cost of capital and property valuations) paired with the waning inflationary environment has put pressure on new development projects. Institutional Equity and Debt providers are more focused on cash flowing assets that have value add and repositioning opportunities. Capital is prepared to focus on impending debt maturities for assets just completing construction and incomplete business plans that are in need of “rescue” or “bridge” capital.    New development projects are still being financed, though it is more crucial than ever to have significant Sponsor equity when marketing to capital providers. This includes having an underwriting that matches investor expectations, and deal profiles that align and “check the box” in today’s ever-changing market.    Equity: Joint Venture Equity investors have become more selective as they continue to seek higher project-level returns and downside protection given the exit valuations and cap rate uncertainty.  Sponsors are utilizing Mezzanine Debt and Preferred Equity as they seek creative ways to structure their capital stacks.     Recourse Debt: Commercial and regional banks have continued to practice prudent and stringent underwriting and have been keen on lending to existing relationships and borrowers willing to bring a meaningful depository relationship to the bank.     Non-recourse Debt: Debt Funds and Private Lenders have continued to fill the gap left by banks, offering more relaxed lending parameters with the ability to creatively work with sponsors to provide capital solutions.  CMBS and Insurance companies have also become more attractive for refinancing debt due to their market-favorable rates.    If you have a development project or existing asset ready for a financing, we are happy to provide more detailed guidance on how pricing and terms would look on your specific asset. #marketupdate #capitalmarkets #commercialrealestate #privateequity #capital #coreadvisorypartners Alan Amici Jeremy Harris Charles Fite Ali Farid Devon Zubka Malcolm Morgan