Our Capital Markets Experts Discuss The Current Landscape

Bisnow’s “Where Is The Money Going?” event (7am July 27 at the University Club of Chicago) is two weeks away and, with miles of column space being used to report on the pain Brexit will cause real estate and new difficulties in financing, the power players of the capital markets say that diversity of capital across the stack remains strong and they're still optimistic about the capital market landscape. Here's what they've been focused on.

Hunt Mortgage Group managing director Greg Cazel (pictured at our May multifamily panel with The Private Bank president of commercial real estate Karen Case) has been on a crash course in Fannie Mae and Freddie Mac these days. Greg is starting cold—he’s relearning Fannie’s post-crash regulations while working to get up to speed on Freddie.

What does Greg like about the two? Fannie and Freddie have diversified their asset offerings, creating programs to do more low-income and green programs, and want to move into workforce housing. Most important, Greg says Fannie and Freddie are hitting their target numbers and doing good volume. And investor appetite for Fannie and Freddie is strong. Greg says borrowers want to lock rates on 10-year Treasury deals, with lending in the 4.25% range on maturing debt. They want a better spread and want to put deals to bed as fast as possible.

KeyBank Real Estate Capital SVP John Hofmann tells us there’s been a rise in private capital investors entering the stack looking to take advantage of prime opportunities, and KeyBank has been approached by entities looking to employ capital across the debt platform. Foreign investors are seeding borrowers in LP platforms and big-ticket purchases, and also putting skin into the debt space. John adds that KeyBank thinks real estate debt is an attractive asset class, especially as a late cycle strategy, as it’s a safer place in the capital stack while still seeing strong yields.

Walton Street Capital principal Robert Bloom says that after eight years of steady growth, trepidation about the future is presenting firms with interesting opportunities. For Walton Street, that means continuing its strategy of leveraging existing relationships to source quality assets at below replacement cost, which it can reposition and sell into a vibrant core market.

To learn more, join us at Bisnow's "Where Is The Money Going?" event, 7am Wednesday, July 27, at the University Club of Chicago, 76 East Monroe St. Register here.