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Q2 Capital Markets Update

published April 1, 2024

Maturities Loom as Private Lenders Fill Void

Almost 20 percent of the country's outstanding commercial debt is maturing this year.  An estimated $929 Billion.  Banks hold roughly 45 percent of 2024 maturities, which represents a quarter of their entire loan holdings. Also staggering, roughly a third of the loans held by CMBS, CLOs, and private credit companies will mature this year.  The below chart breaks down all loan holdings by lender type and maturity year.






In total through 2028, $2.81 Trillion of maturities is coming due.  All of this is happening with a 10-year treasury lingering above 4.30% and not expected to fall below 4.0%.  On top of that, the Fed does not seem to have any urgency to lower short-term rates.  Given this environment and all the uncertainties, lenders have become more cautious about underwriting, terms, and property types and markets they will and won't pursue.


Isolating the banking market alone, which is hyper-sensitive to their deposits relative to loan holdings, below are a few, historically competitive, who are either not quoting or have altogether shut down their balance sheet permanent lending programs for stabilized multifamily:


      - HomeStreet Bank

      - Umpqua Bank

      - Kinecta Federal Credit Union

      - Pacific Premier Bank

      - First Foundation Bank

      - Luther Burbank Savings

With fewer options in the market, lenders have leverage to demand higher spreads and more conservative underwriting.  There are some new bank lenders starting programs that are helping to fill some of the void, but currently not enough to drive spreads to the low/mid-100's as we saw them a few years ago.  Life Companies and REITS are where we are seeing the more competitive spreads for loans $10 million and up.  Our focus generally remains on flexible prepay and pushing leverage through negotiating underwriting assumptions, coverage ratios, and/or utilizing buy-downs.

2024 Commercial Mortgage Maturities Chart.png

Rate and Economic Indicators

  • 10 Year Treasury normalizing at 4.33%:  The forward curve is pinning the 10-year in the low 4%'s for the next several years.

  • Term SOFR at 5.33%:  Not expected to fall as much as originally anticipated, which is slowing the downward pressure on caps.  Forward curve predicts Term SOFR won't drop below 4.0% until the end of 2025. 

  • Unemployment Rate at 3.90%:  0.20% increase from last quarter.  Many of the added jobs part-time.  Cracks showing?

  • Core CPI​:  dropping and 3.2% as of Feb 2024 (YoY).  

Hot Money

Flexible Prepay, Non-Recourse Permanent Fixed Rate Financing

LTV: Up to 75% LTV

Underwriting: 1.15x - 1.20x DSCR (deal and location dependent)

Rates: 6.10% - 6.30%

Property-Type: Multifamily

Geography: California, Oregon, Washington, and Florida

Loan Size: $1 million - $50 million

Term: 3, 5, & 7-year fixed

Interest-Only: 3-years at 65% LTV, 5-years at 55% LTV

Prepay: Stepdown negotiated.

Recourse: Non-recourse

Recent Financings


55+ Active Adult Community

$20,500,000 Equity Recapitalization

with Family Office

Debt Placement: Private REIT

 - 65 lenders pitched

 - 65% LTV

 - 5-Year Fixed, Full-Term Interest-Only

 - Non-Recourse

Photo - 261 Chandeler.png

Office & Retail
2nd Lien Position
Denver, CO & Chandler, AZ

Lender: Private Fund

 - 38 lenders pitched

 - 11 day closing

 - No 3rd party reports

Lender Notes

Fannie Mae & Freddie Mac are offering attractive spreads for properties with affordability components. Buydowns have remained an accretive solution to increase loan proceeds by 2-3%.       

Life Companies are active and getting more creative on prepay structures, but still requires "down the fairway" deals.  Can be a competitive option for pre-stabilized assets in lease-up. 

Banks and Credit Unions have loosened their deposit requirements and we are seeing a few selectively underwriting to 1.15x DSCR's.  Credit Unions have remained a great option for no prepayment penalty.

CMBS remain the "lender of last resort" with rates generally in the high-6%'s to low-7%'s. 

Bridge Lenders are actively looking for deals that pencil, with spreads often in the mid-200's over Term SOFR.  Stabilized Debt Yields generally need to be in the 8.0%+ range.  

Construction Lenders are being selective, with a focus on experienced Sponsors.  Leverage is lower with the banks around 55-60% LTC, which has created an opportunity for Debt Funds to compete for higher leverage requests of up to 80-85% LTC.






5-Year Fixed


5.50% - 6.50%

45-50 days

LTV & DSCR dependent

FHA Refinance
35-Year Fixed


5.25% - 5.75%

120-150 days

not including MIP

Life Insurance


5.60% - 6.25%

45-50 days

DY dependent

Bank, CMBS, &
Credit Union


5.80% - 6.75%

45-60 days

DY & term

Debt Funds 


8.30% - 9.50% +
Spreads of 3.0%+

14-45 days

LTC & stabilized DY dependent



7.75% - 9.25% +

45-60 days

LTC & size

Tim Gerlach Headshot - smile.jpg

Tim Gerlach, CPA  |  Principal

CPA Lic. 130463  |  Broker Lic. 02038912

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