Commercial Real Estate Financing State of the Market | June 2023
Terrydale Capital
Jun 5, 2023 7 Min read
At Terrydale Capital, our commitment is to offer our clients an extensive range of capital solutions. We place great importance on staying abreast of the latest market trends by maintaining consistent communication with our capital market resources and actively exploring emerging sources that have gained traction. We invite you to stay informed by reviewing our most recent financing update, which provides a concise overview of the current market conditions and how we are leveraging them to create opportunities for our valued clients.
Private Money: Rate Range of 12%-14%
In an era of ongoing financial market unpredictability, an increasing number of individuals are seeking alternative investment options. Private money loans have emerged as an attractive choice for those aiming to mitigate risk and achieve financial growth, thanks to their inherent advantages and short-term flexibility.
Debt Funds & Bridge Lenders: Rate Range of 8.00% – 12.00%
Investors have increasingly gravitated towards debt funds, driven by their appealing features such as competitive interest rates and convenient accessibility. These funds have become popular due to their potential for generating high returns, especially when utilized for leveraging opportunities. This is particularly advantageous when investing in properties that hold the potential for added value, such as buildings or land. With interest rates having experienced a slight decline, debt funds present an excellent opportunity to capitalize on and maximize returns.
CMBS: Rate Range of 6.00%-7.00%
Although there has been a recent deceleration in CMBS loan activity, industry experts remain optimistic about a potential market rebound as interest rates stabilize. Despite the temporary slowdown, there is anticipation that the CMBS loan market will regain momentum in the future. This positive outlook is based on the expectation that rates will reach a more stable state, thereby reinvigorating activity within the CMBS lending sector.
Commercial Banks: Rate Range of 6.50%-8.50%
In response to the unpredictable market conditions, traditional banks are proactively adjusting their lending practices to stay competitive. While certain projects are still progressing, there is a notable shift towards focusing on development, refinancing, and rehabilitation endeavors. In order to ensure stability, banks are implementing more discerning underwriting processes, which might prioritize established clients over new ones when assessing potential investments. Additionally, considering the recent Red meeting, it is reasonable to anticipate a corresponding increase in interest rates.
Credit Unions: Rate Range of 6.00% – 7.00%
Credit unions, in comparison to other lenders, often provide borrowers with lower interest rates, making them an attractive option. However, it is worth noting that credit unions typically employ a more assertive lending approach. This means they may have a rigorous underwriting process in place, which can lead to longer closing times, especially in the current market conditions. While credit unions offer competitive rates, borrowers should be prepared for potential delays in loan approval and closing due to the thoroughness of their underwriting procedures.
Fannie & Freddie: Rate Range of 5.40% – 5.75%
Despite the ongoing market turmoil, transactions involving Fannie Mae and Freddie Mac remain robust. We consider this as one of the best options for properties at the moment. Many buyers are going in at lower leverage and coming up with additional equity to lock in better rates.
FHA: Rate Range of 5.00% -7.00%
The rising interest rates associated with FHA loans in commercial real estate present an opportunity for borrowers to smoothly transition from construction and bridge loans. This transition can be particularly advantageous for those seeking financial stability. By taking advantage of FHA loans at a time when interest rates are increasing, borrowers can secure long-term financing options that offer greater stability and potentially lower overall costs. This enables borrowers to transition from temporary financing arrangements, such as construction or bridge loans, to more permanent and favorable FHA loan terms.
Life Company: Rate Range of 6.00%-7.00%
Actively lending on all asset classes. Call us to learn more.
In today’s market, there are many options available for structuring deals, and Mezzanine and Equity financing enable our clients to pursue larger projects. Experienced and qualified investors may even be able to secure a deal with as little as a 5% down payment.
*Rates are estimates and based on the assumption of Max LTV. Lower LTV options would allow for lower rate options in the market
Partner With Terrydale Capital for Your Debt Financing Needs
When it comes to debt financing, understanding the right timing, process, and options is crucial. At Terrydale Capital, we provide a comprehensive range of commercial loan solutions tailored to meet your business's unique needs.
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Headquartered in Dallas, Texas, Terrydale Capital is a leader in commercial real estate financing. We have close relationships with the nation’s top banks, lenders & family offices allowing us to provide the most competitive financing solutions in the market.
