Financing commercial real estate projects at a time of sharp interest rates is no simple matter. CMBS issuance tumbled nearly 35 percent annually in the third quarter, according to Trepp, as big banks pulled back on loans.
Their absence could provide an opening for alternative lenders like Madison Realty Capital, which has long specialized in special situations.
“Because banks have pulled back dramatically, there’s an opportunity for us,” Madison co-founder Josh Zegen told TRD’s weekly podcast, “Deconstruct.”
With rates rising and record amounts of debt maturing in the next few years, investors are circling distressed assets. On the latest episode of “Deconstruct,” Zegen talked about how his firm is focused on loan-to-loan financing and scooping up debt from others looking to reduce their exposure to real estate.
“The first crack here is more office loans,” he said. “The second is probably some legacy defaulted hotel loans.”
Offices are “probably the easiest asset to hand over the keys to a bank just to say, ‘I’m out,’ because of the capital required to get it where it needs to be,” Zegen added.
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This episode is sponsored by Dottid.