Assessing the actual impact of the pandemic on lender outlook & expectations, as well as how the resulting debt structure standard impacts commercial real estate transactions
In this episode of Real Wealth, Real Health, we welcome back, Todd Friedenberg of Q10 Vista Commercial Mortgage Group. At the start of the Covid-19 pandemic in 2020, Todd shared his insights with us on how the retail, hotel, multifamily, and industrial commercial real estate sectors would fare through the pandemic & shutdowns, as well as how lenders would likely respond. In this episode, we revisit some of Todd’s predictions and assess the actual impact that Covid-19 has had on real estate lenders and their requirements of borrowers. In addition to looking back on our predictions for the commercial real estate sector, we assess the factors that have bucked expectations or changed throughout the year, and the impact these changes have had on rates & requirements. Finally, we talk about how each sector is poised to perform as we emerge from lockdowns and restrictions begin to lift.
Besides looking back at lending activity during the pandemic, this discussion examines how debt impacts commercial real estate investments, especially as requirements like 12-month interest reserves have become standard in response to pandemic-driven uncertainty. We explore how Real Estate Sponsors view debt, by examining the key metrics they pay attention to, how they handle additional required reserves, and the preferred debt sources for different types of properties, or in different stages of the business plan. We further discuss the impact of mezzanine debt on transaction and investor returns, as well as our predictions for the future movements of interest rates and cap rates as we (hopefully) begin the economic recovery.
Key Insights:
· Assessing the impact that the pandemic has actually had on lenders compared to our expectations
· Understanding how Real Estate Sponsors view debt for different types of commercial real estate projects
· The pros and cons of using Debt Funds vs Agency Loans vs Bank Loans
· Understanding how mezzanine debt impacts a transaction, and thus investor returns
· Reviewing the key metrics both lenders and borrowers ask about most frequently
· Predicting the future movements of interest rates & cap rates across commercial real estate sectors
· How Covid-19 has impacted lending activity in secondary and tertiary markets
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Guest Bio:
Todd Friedenbery is President and a principal of Q10|Vista Commercial Mortgage Group and has over 30 years of commercial real estate experience in debt & equity financing, brokerage and valuation consulting. Mr. Friedenberg was previously a Vice-President with GE Commercial Finance and Column Financial (Credit-Suisse), and served as a commercial mortgage banker since 1990 with various firms in Nashville. He has originated more than $1 billion of debt and equity over his career.
Todd Friedenberg is a graduate of Indiana University and received a B.S. in Business majoring in Finance and Real Estate Administration. Todd is a Certified Commercial Investment Member (CCIM) with the Commercial Investment Real Estate Institute and is a Tennessee Certified General Appraiser and holds a Tennessee Affiliate Brokers License. Mr. Friedenberg is involved with several Nashville area Non-profit organizations and currently serves as Board Chairman of Samaritan Recovery Community and as a close advisor to Alpha Investing, serving as our VP of Commercial Real Estate.
Resources:
Real Wealth Real Health
Alpha Investing
podcast@alphai.com
https://www.q10capital.com/
Todd on LinkedIn
Content.naic.org/
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