Gantry Reports Steady Commercial Mortgage Production in Q1 2024, Anticipating Momentum for a Stronger Second Half of the Year
April 26 2024 - 10:07AM
Business Wire
Gantry’s $18 Billion Loan Servicing Portfolio Remains at Strong
Performance; Retail, Multifamily, Industrial, Medical Office, and
Self Storage Assets Remain Prioritized Lender Targets; Life
Company, Agency, CMBS, Debt Fund, and Credit Union Sources Continue
to Backfill Bank Retreat
Gantry, the largest independent commercial mortgage banking firm
in the U.S., reported a steady and improving pace for commercial
mortgage production in Q1 2024 as price discovery adjusts to a
higher rate environment and timely maturities motivate new
assignments moving into Q2/Q3 2024. Acceptance of a new ‘higher for
longer’ rate environment, liquidity in the market from bank
alternatives, and overall market health outside of the office
sector have kept the firm hard at work successfully identifying
relevant financing options reflecting the demands of the current
commercial real estate cycle.
“Our production teams are successfully sourcing debt solutions
for our clients in a tough cycle. That’s not saying we aren’t
working harder to optimize the outcome, but we are still securing
viable loans for a wide range of borrowers,” said Gantry Principal
Braden Turnbull. “The pullback from banks as a primary debt source
for many elevates our role in the process as we lean into our
roster of correspondent lenders and vetted capital sources to find
viable funding alternatives. We have to expect that rates will
remain in this new higher range for the foreseeable future, but
regardless, for most properties we can still identify a workable
debt program and structure.”
Representative Gantry transactions for Q1 2024 production
include:
- Industrial: $91 Million Construction-to-Permanent Loan /
Gillespie Field iPark
- Multifamily: $128 Million Construction-to-Permanent Loan
/ Legado at the Met
- Office: $28.5 Million Permanent Loan for Credit Tenant
Repositioning / U.S. DOJ Facility
- Medical Office: $28 Million Refinance / Torrance
Memorial Specialty Center
- Retail: $12.8 Million Permanent Loan / Citrus Landing
Grocery-Anchored Retail Center
- Self Storage: $9.5 Million Permanent Loan / Store Here
Facilities
Production and Trends
Gantry's analysis of the Federal Reserve's recent communications
suggests that U.S. capital markets are likely to maintain higher
interest rates throughout 2024. While there may be hopes for Fed
rate reductions this year, it's crucial to recognize that a return
to pre-volatility levels is not expected in the near term.
Nevertheless, the market is adapting, with price discovery aligning
with the new cost of capital. Most performing assets and relevant
developments are benefiting from ample liquidity, thanks to a
diverse range of loan programs tailored to the current market
cycle. Optimism persists for potential rate relief in the second
half of 2024, as market rates appear to have stabilized,
encouraging market participants to adapt, adjust, and engage in
transactions.
“Our relationship with hundreds of CRE debt sources has made us
a relevant partner for a client’s executive team as we navigate a
tough cycle,” said Gantry Principal Paddy Ryan. “As banks have
stepped back from the market to shore up their operations and
process shifting regulatory policy, Gantry’s correspondent life
company lenders are a reliable alternative for permanent debt and a
wide range of construction-to-permanent, bridge, and participating
loans, often with some new flexibility on prepayment. Equally, we
have working relationships with hundreds of capital sources
including CMBS/Conduit, Debt Fund, Agency, Credit Union, Private
and even still Bank lenders that all have their merits and can
offer attractive programs for a range of borrower
requirements.”
Relevant trend considerations for commercial mortgage production
looking forward include:
- There has been a shift from optimism surrounding interest rates
coming into the year to uncertainty with higher rates and
volatility. This has created friction in the market putting
pressure on commercial real estate financing. Fortunately, the
amount of debt capital that remains in the market ready to be
deployed is strong at this time. Borrowers and lenders will find
balance when forced to transact in a higher interest rate
market.
- Pending maturities on performing assets are refinancing with
relatively attractive permanent loan options for the cycle in 5-,
7-, and 10-year terms.
- New construction funding is available from a range of sources
for viable projects ready to break ground or refinancing
entitlement and land carry costs.
- Life companies remain an active and reliable source for
non-recourse financings at compelling rates with a range of
permanent, participating, and bridge programs.
- Agencies remain active with attractive programs for multifamily
borrowers that can include interest only terms and 35-year
amortization for qualifying sponsors and assets.
- Agencies are aggressively competing to deploy allocations to
assets that meet their affordability requirements, offering even
more attractive terms on permanent debt.
- Conduit lenders are active in the market again with new 5-year
and traditional 10-year CMBS programs for sponsors requiring higher
leverage.
- Credit Unions are a resource for smaller transactions, with
comfortability across a range of asset classes including retail,
multi-tenant industrial, medical office and apartments.
- Debt funds are active in the bridge and construction space.
Bridge to Bridge is a viable option for projects still in
transition or delaying construction.
- For assets requiring new equity to right-side debt service
coverage requirements, participating loans, preferred equity, and
mezzanine debt are available options.
Servicing and Culture
Gantry maintains its distinction as a Primary Servicer rated by
Standard & Poor’s. With an $18 billion portfolio encompassing
over 2,100 unique loans spanning the entire range of CRE asset
categories, the firm's portfolio performance consistently meets
100% of expectations. Even two years after the onset of rate spikes
and the subsequent performance challenges of the current cycle,
Gantry's portfolio resilience stands as a testament to the
collective efforts of its dedicated teams, from loan origination to
accounting and professional services. Gantry's exclusive dedication
to commercial mortgage banking fosters a cohesive, client-centric
culture throughout the organization, extending from loan
origination to servicing, and beyond maturity.
About Gantry
At Gantry, independent thinking is in our genes. As a privately
held firm, we take an intentional approach to everything we do. So,
as our industry consolidates and becomes less personal, we push
ourselves to ignore convention, to set a high standard and to
always prioritize people ahead of profits. With over 30 years of
experience of loan production and managing an $18 billion national
servicing portfolio, our firm leverages a well-established
correspondent-driven platform to construct the best financing
solutions for our clients. For those seeking a partner that
delivers more, we’re a little different. The right kind of
different. To find out why and how, click here:
www.gantryinc.com
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version on businesswire.com: https://www.businesswire.com/news/home/20240426210410/en/
Chris Egger – CME MarCom chris@chrisegger.com
Peter Vestal – Gantry pvestal@gantryinc.com