Capital Markets

Commercial Real Estate Debt Markets Today, and in the Future

Capital Markets Conversations

December 18, 2023

James Millon, U.S. President of Debt & Structured Finance, provides commentary on near-term transaction and lending activity in the face of volatility and elevated interest rates. In this conversation, James explores opportunities as we move through current challenges toward a more favorable commercial real estate environment.
James Millon comments on transaction and lending activity today and in the future.


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  1. What’s getting financed today. Deals with positive leverage or a positive debt-service coverage ratio. Think retail, hospitality, and occupied office. Also desirable: asset classes like multifamily and industrial, where strong rental rates can get to positive leverage in two to three years.
  2. Lender sentiment and 2024 outlook. Lenders are cautious, writing conservative loans. They want to be paid their interest, get back the principal, then reallocate the capital. Nontraditional funding sources, opportunistic lenders, and equity investors are more active. They’re looking to realize outsized returns by buying distressed credit and providing gap funding in capital stacks.
  3. Key considerations beyond 2024. Interest rate environment and debt service coverage ratio must be factored into underwriting. Looking at volatility, investors and lenders will need to manage their risk so their portfolios can withstand shocks as future macroeconomic events will continue to affect the market.

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