Real Estate Financing Market Observations – Fall/Winter 2020/2021 Edition
Atlanta, Georgia – Leisure Financial Group (“LFG”) is an experienced mortgage brokerage firm that structures, arranges, and services loans in the real estate industry specializing in traditional assets through our subsidiary LFG Commercial Real Estate (“LFG CRE”) as well as specialty assets in Hotels, Resorts, Golf Facilities, and Marinas. LFG CRE focuses on commercial real estate mortgage originations in Office, Industrial, Retail, and Multi-Family as well as offering franchise lending for Fitness Centers, Restaurants, Retail Shops, and Self-Storage Facilities.
Our track record of success and over 100 years of combined lending experience has created strong relationships with a variety of lenders from Traditional Banks, Life Insurance Companies, and CMBS to provide clients with solutions that achieve the best financial terms available.
What LFG Is Seeing In The Debt Markets:
Hospitality: The lending market remains challenged for hotel properties. From Spring 2020 when the COVID 19 pandemic lockdowns occurred in the U.S. and hotel performance dropped dramatically, occupancy rates have continued to recover, but REVPAR results remain well below 2019 levels. That said, certain drive-to vacation markets have shown higher than expected occupancies than what occurred in the same period 2019. Full-service convention hotels, and business travel focused properties, continue to struggle as business travel remains soft. Based on data from hotel operators and travel experts, medical advances are likely the key to returning hotel occupancy rates to pre COVID levels. LFG continues to assist clients seeking new financing for hotels and/or to work with clients and lenders to restructure existing loan relationships.
Resorts: Resorts that are within a few hour’s drive from major MSA’s, have seen interest from lenders. Lenders are showing some flexibility when considering new loan relationships based on actual trailing 12-month results. Based on LFG engagements, resort occupancy can be up significantly for transient guests, but group business remains well below forecast. Proforma transactions are difficult in this market and new construction lending is not yet available.
Golf: Loan opportunities for stabilized golf properties is growing. Interest rate spreads remain elevated and select lenders are offering conservative LTV’s. Under-performing or “proforma” properties have limited debt opportunities. Recent increases in golf rounds in the U.S. have encouraged lenders to give golf a second look as a new source of loan opportunities – golf is an activity that appears to thrive in the era of social distancing.
Marina: Marinas have seen increased interest from select lenders. Industry consolidation and overall slip occupancy has improved, increasing investor interest in this asset class. Rising values are helping to drive lower spreads and higher LTV’s.
Office/Industrial/Multi-Family: These “core” CRE products continue to be favored by Traditional Banks, Life Insurance Companies, and CMBS lenders. However, lenders are being more cautious when underwriting CRE transactions due to COVID and the impact it has had on the economy and purchasing trends. Retail and office are two product types that have experienced stress in the market and may continue to do so in the future as work from home trends evolve and small businesses struggle in shopping centers.