Real Estate Capital USA consults Andrew Thornfeldt on why the debt markets are slowing down
Summary
Andrew Thornfeldt speaks with Real Estate Capital USA as the real estate debt capital markets are slowing down. Thornfeldt discusses when the markets might thaw and what the implications are for deal terms now.
Andrew Thornfelt in Real Estate Capital USA"That doesn't mean that deals aren't getting done. But terms are certainly more challenging, particularly on large transaction."
Over the last several months, it has been a slower erosion in pockets of the market, says Andrew Thornfeldt, a managing director who leads advisory firm Chatham Financial’s real estate investment banking advisory and defeasance practices. “There has not been one event that has really triggered any sort of exit of liquidity altogether, it has been just slowly going away.”
While the Fed began a series of rate hikes in March, additional increases over the summer provided an inflection point for the slowdown in lending, Thornfeldt says. He explains some banks — bulge bracket organizations in particular — have struggled to continue deploying capital in ways that meet their lending goals. Debt capital is available, but it is situation- and sponsor-specific about moving.
Thornfeldt also speaks on the possibility of activity from debt funds and alternative lenders as well as capital from large investors like pension funds and sovereign wealth funds looking to deploy their resources in creative ways.
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