How to Navigate the Changing Landscape of Commercial Real Estate Lending

In today's economic climate, it's crucial to stay informed about shifts in the commercial real estate lending landscape. I wanted to bring to your attention a notable development that might impact your investment strategy.

Current Economic Environment: Decline in Smaller U.S. Banks' CRE Lending

According to recent data from MSCI Mortgage Debt Intelligence, smaller U.S. banks have significantly scaled back their commercial real estate (CRE) lending in Q2 of 2023. From an all-time high of 34.2% of all commercial mortgage originations in Q1, these regional/local banks captured only 25.1% of the market in the second quarter. This represents the most substantial decline in lending by smaller banks in a single quarter.

The share of CRE loans originated by regional/local banks fell by 900 basis points in Q2. The failures of Silicon Valley Bank, Signature Bank, and First Republic earlier in the year have cast a shadow over the lending behavior of other regional/local banks, resulting in a 53% year-over-year decline in commercial mortgage originations in Q2.

Why the Shift?

These declines are a departure from the seasonal pattern, where originations typically rise into the second quarter. The recent downturn has been influenced by the failures of prominent banks and a general decline in confidence, leading to a 4% reduction in originations by smaller lenders in Q2.

Consider Life Company Lending for Stability and Assurance

In times of uncertainty, exploring alternative lending options becomes imperative. Life company lending has emerged as a reliable and stable choice for commercial real estate financing. As a correspondent for 19 life insurance companies, I can offer you a seamless experience with fewer complications.

Benefits of Life Company Lending

• Leniency with Properties - Freedom to Choose: Life insurance companies grant approval for loans on class A, B, or C-type properties, providing you the freedom to invest in multi-family units, self storage or industrial spaces, and more. Their nationwide coverage includes top, secondary, and tertiary markets, offering flexibility in your investment choices.

• Rates and Return - Locking in Benefits: Life insurance companies allow you to lock in rates at the time of application, providing an advantage over banks that typically wait until closing. This flexibility extends to choosing fixed loan terms of 5, 10, 15, 20, and 25 years, so you can tailor your financing according to your specific needs. Finally, our life companies' spreads range from 145 to 225 basis points over the like term treasury,?which makes rates substantially lower than banks.

• Better Flexibility - No Account Setup Hassles: Unlike banks that often require you to set up an account before considering your loan application, life companies offer more flexibility. You won't be required to open a new account or meet a minimum deposit just for loan approval. This freedom extends to not being bound by annual loan covenants, net worth, and liquidity tests. We also work with a life company that doesn't require windstorm insurance.

• Navigating the Process - Partnering with an Expert: While the benefits of life company lending are enticing, it's crucial to partner with an expert well-versed in these deals. With my role as a correspondent for 19 life insurance companies, you can rely on my resources to ensure a smooth and hassle-free experience.

Your Next Steps

If you're contemplating a life company for your commercial real estate investment loan, I invite you to connect with me. Let's discuss your goals and explore how a life company loan can be the ideal solution for your unique needs. With my experience and a vast network of life insurance companies, I am confident we can secure the best outcome for you.

As always, I am here to provide the insights and support you need to make informed decisions in today's ever-evolving market. Feel free to reach out, and let's navigate this changing landscape together.

Schedule a 15-minute complimentary consultation:

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