CREFC Conference Miami 2023 Highlights

The annual CRE Finance Council (CREFC) Conference was hosted in Miami at the Loews Miami Beach Hotel this week. Conference attendance was at its largest to date with over 2,100 registered professionals. The record size group had an optimistic feel though was eager to hear the experts discuss what 2023 could have in store for the commercial real estate finance industry. The following are Slatt Capital’s takeaways from the high profile event:

• Owners looking to refinance maturing loans in 2023 and beyond may be required to inject additional equity to compensate for increased interest rates as many loans will not meet minimum debt yield requirements.
• Determining property value through comparable transactions prior to June 2022 will be difficult with the steep increase in interest rates.
• Multi-family product continues to be a front-runner among real estate investors with no immediate signs of things changing.
• Rents on multi-family are expected to either remain level or slightly decrease across market rate housing through 2023.
• Office continues to struggle as companies are looking to reduce unused space due to increased hybrid and at-home work.
• Office properties are around a 2% delinquency rate which is lower than most property types, however, they also have one of the higher special servicing request rates at around 4%.
• Debt yields and cap rates have not kept up with increased interest rates.
• There are opportunities in five-year fixed-rate loans that are competing with traditional CMBS execution.
• CMBS lending will require a recovery in the market to return to normal operation.
• Many lenders are now focused on debt service coverage rather than debt yield when evaluating a deal.
• Transactions and lending in the CRE space were in a wait-and-see mode for the second half of 2022—The question everyone wants to be answered is, will that continue in 2023?