Key Takeaways from the 2021 Western States CREF Conference
Last week, PSRS was present at the 2021 CMBA Western States CREF Conference in Las Vegas with many of the nation's major commercial real estate lenders in attendance. We've compiled a list of key takeaways that we learned from the conference:
Due to Covid-19 uncertainty, there is $4.8 trillion of unspent money sitting around for future investment/spending. There's been a huge transfer of wealth from the 65+ generation to the 20+ generation as baby boomers transition into retirement. This creates a potential of increased investment into real estate, spurring transactions and fueling value appreciation.
Lenders have plenty of money to deploy and are growing their programs, but are being very selective. They are still cautious on office assets and seem to be more in favor of strip and grocery-anchored retail.
Lenders have moved minimum deal sizes up to better scale what they do in an effort to get money out of the door. The best pricing we heard was 115, but the herd is more like 1.50%-1.65% with a pricing adjustment of +/- 15 basis points for leverage, quality, location, etc.
An interesting new program from one of our more creative Life Co's is a bridge deal program of which they are pushing to get deals in before the year end. They are very interested in new apartments in lease-up and other high quality commercial real estate assets. Their target loan is +/- $20 million with terms including a 3.5%-4.5% rate, 2-year terms, and full-term interest only. Max leverage is 75% to stabilized value (80-85% of cost).
