www.marejournal.com
6C — September 29 - October 12, 2017 — Fall Preview — M id A tlantic
Real Estate Journal
F inance
By Daniel Palmier, UC Funds Multifamily & non-traditional lending: 2018’s best-performing investments
here’s no shortage of debt for income- producing assets in today’s mar- k e t . T h e challenges f o r m o s t s p o n s o r s lies in find- ing equity on income- p r o du c i ng a s s e t s o r debt capital for value-add, transitional assets. Plenty of lenders are ac- tively pursuing office, indus- trial, and retail assets. And T Daniel Palmier
apartments, empty nesters and millennials who view housing as an integral part of their lifestyle are buying in and adding to the absorp- tion level. They want to be in prime locations near transit and work, and they want amenity-rich living spaces with lounges, gyms, and a built-in social atmosphere. In the B and C asset classes, value-add multifamily busi- ness plans continue to offer good upsides, with tenants willing to pay higher rents for better quality housing, or with sponsors who continue
to bankroll these deals. Why non-traditional lending is the new normal Traditional lenders are still very active, but only for their key clients with the biggest bank accounts. They’ve shut out the middle-market devel- opers and investors to mitigate their risk. As a result, these owners have turned to non- traditional lenders to finance these deals, and it’s started a trend: As the market for non- traditional lenders has grown, pricing has dropped to be on par with conventional lend- ers, while at the same time offering the added benefits of non-recourse, flexibility, and quicker closing timeframes. Today, even institutional real estate investors are turning to companies like ours for financ- ing to take advantage of the added benefits and competi- tive capital pricing. Looking ahead to 2018 After a strong summer with no headwinds in sight, Q4 of 2017 feels like it’s going to be a very active market. We all hear how the market is due for a correction at some point, but real estate is still one of the best investments. It continues to provide great returns, strong cash flows, and a hedge against inflation. At UC Funds, our invest- ment focus for the remainder of 2017 and 2018 will continue to be in stable properties, value play/transitional assets, and development deals ranging from $5 to $35 million nation- wide. We introduced UC GO in mid-2017 with more than a billion dollars of available capital. We developed UC GO in conjunction with Barclays to offer a non-recourse com- mercial mortgage bridge loan available at 85 percent LTV and 0.5 DSC. All available without the bank restrictions and contingencies. Barring a black swan event, the multifamily market should continue to prove to be one of the best performing asset classes in 2018, delivering solid returns with a reason- able risk profile. Revenue growth rates may stagnate a little, but overall we expect year-over-year gains in the industry, which will continue to attract sponsors, lenders, and equity to the market. Daniel Palmier is pres- ident and CEO of UC Funds, a provider of debt and capital solutions. n
while hospitality presents a few challenges in the cur- rent lending environment,
Demand for multifamily continues Despite recent heavy de-
After a strong summer with no headwinds in sight, Q4 of 2017 feels like it’s going to be a very active market. We all hear how the market is due for a correction at some point, but real estate is still one of the best investments.
liveries of new multifam- ily product in most regions of the country, supply and demand are still balanced. Years of short supply resulted in pent-up demand, so all the new product is quickly absorbed and not overwhelm- ing the market. For luxury
there is capital available for high-quality hotel assets with seasoned sponsors. But, overwhelmingly, commercial real estate capital is chasing multifamily aggressively in any asset class everywhere and that won’t change for 2018.
Made with FlippingBook flipbook maker