Top Takeaways from CREF '23

There's still plenty of money to be lent and most lenders haven't shrunk their targets for 2023, even if they aren't quite sure how they are going to get there.

Spreads on corporate bonds which Life Co lenders compete against for their allocations have come in recently after going unusually wide. This has allowed mortgage spreads and pricing to come in as well.

Some lenders are being conservative and aren't widening their strike zones to get money out. They are going to be lower priced with most between 150-180 over the corresponding treasury and some outliers below that range. Others see an opportunity to gain some yield on less favorable property types or are offering additional prepayment flexibility or other features to get their money out. They are pricing closer to 180-220 spreads over the corresponding treasury.

Multifamily and Industrial continue to be the preferred asset classes for lenders and command the best pricing. Office assets are the most difficult as it has the most uncertainty. Suburban Office buildings with very granular rent rolls are what those lenders willing to lend on Office will likely consider.

Not a lot of maturities are scheduled this year but that picks up again in 2024-2025.

More and more banks are heading to the sidelines or focusing on their depositors.

Construction money is still available for the right projects albeit at lower LTC.