{"id":1004207098,"date":"2018-02-14T08:40:16","date_gmt":"2018-02-14T16:40:16","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004207098"},"modified":"2022-12-08T22:05:56","modified_gmt":"2022-12-09T06:05:56","slug":"intense-competition-fuels-capital-source-convergence-in-2018","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/intense-competition-fuels-capital-source-convergence-in-2018\/","title":{"rendered":"Intense Competition Fuels Capital Source Convergence in 2018"},"content":{"rendered":"<p>By Sanyu Kyeyune<\/p>\n<div id=\"attachment_1004207102\" style=\"width: 410px\" class=\"wp-caption alignright\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-1004207102\" data-attachment-id=\"1004207102\" data-permalink=\"https:\/\/www.commercialsearch.com\/news\/intense-competition-fuels-capital-source-convergence-in-2018\/convergence\/\" data-orig-file=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/02\/convergence.jpg\" data-orig-size=\"756,344\" data-comments-opened=\"0\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;Sanyu Kyeyune&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;1518534530&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}\" data-image-title=\"convergence\" data-image-description=\"\" data-image-caption=\"&lt;p&gt;From left to right: Byron Boston, &lt;\/p&gt;\n\" data-large-file=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/02\/convergence.jpg?w=756\" class=\"wp-image-1004207102\" src=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/02\/convergence.jpg\" alt=\"\" width=\"400\" height=\"182\" srcset=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/02\/convergence.jpg 756w, https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/02\/convergence.jpg?resize=300,137 300w\" sizes=\"auto, (max-width: 400px) 100vw, 400px\" \/><p id=\"caption-attachment-1004207102\" class=\"wp-caption-text\">From left to right: Byron Boston, president, CEO &amp; co-investment officer of Dynex Capital; Daniel Baker, executive vice president of KeyBank Real Estate Capital; Jeff Friedman, co-founder of Mesa West Capital; and Mark Williams, managing director of Eastdil Secured.<\/p><\/div>\n<p>The boundaries between major capital sources are becoming indistinct, spurred on by the influx of market participants chasing yield. More often, well-established financial institutions are crossing over into commercial real estate through mergers and acquisitions, while debt funds are increasingly taking market share from more traditional financing sources\u2014all to fit different niches within the capital stack. Last night at the Mortgage Bankers Association CREF\/Multifamily Finance Conference in San Diego, industry experts representing a variety of capital providers discussed these and other trends reshaping the competitive landscape in 2018.<\/p>\n<p>\u201c<em>Five years ago, we did transactions with 80 different lenders. Last year, that number was 130<\/em>,\u201d said Daniel Baker, executive vice president of KeyBank Real Estate Capital, which underwrites, originates and distributes permanent mortgage financing through a number of vehicles, including Freddie Mac, Fannie Mae, CMBS, FHA and direct placements. Baker attributed the spike in new entrants to the wealth of available capital coming in from a variety of sources.<\/p>\n<p>\u201c<em>There\u2019s so much pent-up demand from foreign capital providers<\/em>,\u201d Baker offered as an example, adding that international investors continue to be drawn to debt funds as an alternative financing source. In the past year, he\u2019s also observed that these non-bank groups have responded by tightening their pricing to be more in line with banks. Meanwhile, banks continue to pull back on construction lending amid stricter underwriting standards and concerns of oversupply, creating more opportunities for alternative capital providers.<\/p>\n<h2>The draw of U.S. assets<\/h2>\n<p>Mark Williams, managing director of Eastdil Secured, concurred that offshore investors continue to be drawn to U.S. real estate assets, due to the market\u2019s strong property fundamentals, comparably low interest rates and relative stability: \u201c<em>Over the past 10 years, volatility has been very low<\/em>.\u201d But more recently, Williams has noticed a standoff between sellers holding out for rates to go down and buyers wanting to be compensated correctly.<\/p>\n<p>As a result, he said, spreads have continued to compress, especially since the beginning of 2018,\u00a0with one possible effect being that China will reemerge as a primary source of foreign pension capital as its middle class expands. For Eastdil\u2014which specializes in financing institutional property and portfolio deals for office, industrial, retail and multifamily assets\u2014this trend would be beneficial.<\/p>\n<p>Co-founder of Mesa West Capital Jeff Friedman cited increased merger activity by firms outside of real estate as one of the major shifts in the competitive landscape. Last September, Morgan Stanley announced its acquisition of Mesa\u2019s real estate credit platform. Speaking on a conference panel, Friedman explained how the move enables his company to leverage the financial services giant\u2019s global resources, alongside its own, existing domestic relationships.<\/p>\n<p>\u201c<em>What we offer is an alternative to the banks, but we\u2019re starting to become an alternative to life companies, as well<\/em>,\u201d noted Friedman, whose firm provides borrowers with higher-leverage, non-recourse, short- to medium-term mortgages for acquisitions and recapitalizations. When Friedman established Mesa in 2004, there were only a handful of competitors in the market. Today, Friedman noted, there are more participants providing tailored financing solutions to a more diverse group of stakeholders: \u201c<em>What a debt fund can offer is current income and downside protection<\/em>.\u201d<\/p>\n<h2>Pricing struggles<\/h2>\n<p>While increased capital inflows are driving down the cost of non-bank financing in the U.S., banks are unlikely to respond by loosening their underwriting standards, Baker claimed, which is a net positive for the credit quality of new loans. But they may increasingly struggle to achieve favorable pricing, he cautioned, adding that the industry should keep an eye on agency lenders. \u201c<em>(The agencies) had a record year, at around $80 billion (in loan originations) in 2017, and they\u2019re also vying to offer fixed-rate products<\/em>,\u201d said Baker. \u201c<em>The life companies are some of Freddie Mac\u2019s biggest buyers.<\/em>\u201d<\/p>\n<p>So what does this all mean for the commercial real estate lending market in 2018? Among capital providers with varying risk appetites, the consensus seems to be that gradual shifts are unlikely to have material effects on transaction volume but the decade-long bull run that we\u2019ve been on may start to lose steam. \u201c<em>If we see rates continue to rise and cap rates rise drastically,<\/em>\u201d warned Baker, \u201c<em>then the market could cool. But I don\u2019t anticipate a huge correction.<\/em>\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Distinctions among capital sources are blurring as the global search for yield heats up, intermediaries and lenders concurred at MBA\u2019s annual finance conference last week in San Diego.<\/p>\n","protected":false},"author":1245,"featured_media":1004207102,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21808,21825,21783,23891,21742],"tags":[33101,34789,33240,34040],"class_list":["post-1004207098","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-finance","category-investment","category-national","category-latest","tag-eastdil-secured","tag-keybank-real-estate-capital","tag-mesa-west-capital","tag-mortgage-bankers-association"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v24.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Intense Competition Fuels Capital Source Convergence in 2018 - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/intense-competition-fuels-capital-source-convergence-in-2018\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Intense Competition Fuels Capital Source Convergence in 2018\" \/>\n<meta property=\"og:description\" content=\"Distinctions among capital sources are blurring as the global search for yield heats up, intermediaries and lenders concurred at MBA\u2019s annual finance conference last week in San Diego.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/intense-competition-fuels-capital-source-convergence-in-2018\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2018-02-14T16:40:16+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-12-09T06:05:56+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/02\/convergence.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"756\" \/>\n\t<meta property=\"og:image:height\" content=\"344\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Sanyu Kyeyune\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/intense-competition-fuels-capital-source-convergence-in-2018\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/intense-competition-fuels-capital-source-convergence-in-2018\/\",\"name\":\"Intense Competition Fuels Capital Source Convergence in 2018 - Commercial Property Executive\",\"isPartOf\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/intense-competition-fuels-capital-source-convergence-in-2018\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/intense-competition-fuels-capital-source-convergence-in-2018\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/02\/convergence.jpg\",\"datePublished\":\"2018-02-14T16:40:16+00:00\",\"dateModified\":\"2022-12-09T06:05:56+00:00\",\"author\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#\/schema\/person\/e7b65e0bddb12f2406dadf35eb67c6a1\"},\"breadcrumb\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/intense-competition-fuels-capital-source-convergence-in-2018\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.commercialsearch.com\/news\/intense-competition-fuels-capital-source-convergence-in-2018\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/intense-competition-fuels-capital-source-convergence-in-2018\/#primaryimage\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/02\/convergence.jpg\",\"contentUrl\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/02\/convergence.jpg\",\"width\":756,\"height\":344,\"caption\":\"From left to right: Byron Boston,\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/intense-competition-fuels-capital-source-convergence-in-2018\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.commercialsearch.com\/news\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Intense Competition Fuels Capital Source Convergence in 2018\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#website\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/\",\"name\":\"Commercial Property Executive\",\"description\":\"\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.commercialsearch.com\/news\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#\/schema\/person\/e7b65e0bddb12f2406dadf35eb67c6a1\",\"name\":\"Sanyu Kyeyune\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/797379d6c9d8d994c21bf93f70e8931856c68310c11c7210c9a028cec55d0ced?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/797379d6c9d8d994c21bf93f70e8931856c68310c11c7210c9a028cec55d0ced?s=96&d=mm&r=g\",\"caption\":\"Sanyu Kyeyune\"},\"url\":\"https:\/\/www.commercialsearch.com\/news\/author\/sanyukyeyune\/\"}]}<\/script>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"Intense Competition Fuels Capital Source Convergence in 2018 - Commercial Property Executive","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.commercialsearch.com\/news\/intense-competition-fuels-capital-source-convergence-in-2018\/","og_locale":"en_US","og_type":"article","og_title":"Intense Competition Fuels Capital Source Convergence in 2018","og_description":"Distinctions among capital sources are blurring as the global search for yield heats up, intermediaries and lenders concurred at MBA\u2019s annual finance conference last week in San Diego.","og_url":"https:\/\/www.commercialsearch.com\/news\/intense-competition-fuels-capital-source-convergence-in-2018\/","og_site_name":"Commercial Property Executive","article_publisher":"https:\/\/www.facebook.com\/CPExecutive","article_published_time":"2018-02-14T16:40:16+00:00","article_modified_time":"2022-12-09T06:05:56+00:00","og_image":[{"width":756,"height":344,"url":"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/02\/convergence.jpg","type":"image\/jpeg"}],"author":"Sanyu Kyeyune","twitter_card":"summary_large_image","twitter_creator":"@cpexecutive","twitter_site":"@cpexecutive","schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.commercialsearch.com\/news\/intense-competition-fuels-capital-source-convergence-in-2018\/","url":"https:\/\/www.commercialsearch.com\/news\/intense-competition-fuels-capital-source-convergence-in-2018\/","name":"Intense Competition Fuels Capital Source Convergence in 2018 - Commercial Property Executive","isPartOf":{"@id":"https:\/\/www.commercialsearch.com\/news\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.commercialsearch.com\/news\/intense-competition-fuels-capital-source-convergence-in-2018\/#primaryimage"},"image":{"@id":"https:\/\/www.commercialsearch.com\/news\/intense-competition-fuels-capital-source-convergence-in-2018\/#primaryimage"},"thumbnailUrl":"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/02\/convergence.jpg","datePublished":"2018-02-14T16:40:16+00:00","dateModified":"2022-12-09T06:05:56+00:00","author":{"@id":"https:\/\/www.commercialsearch.com\/news\/#\/schema\/person\/e7b65e0bddb12f2406dadf35eb67c6a1"},"breadcrumb":{"@id":"https:\/\/www.commercialsearch.com\/news\/intense-competition-fuels-capital-source-convergence-in-2018\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.commercialsearch.com\/news\/intense-competition-fuels-capital-source-convergence-in-2018\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.commercialsearch.com\/news\/intense-competition-fuels-capital-source-convergence-in-2018\/#primaryimage","url":"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/02\/convergence.jpg","contentUrl":"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/02\/convergence.jpg","width":756,"height":344,"caption":"From left to right: Byron Boston,"},{"@type":"BreadcrumbList","@id":"https:\/\/www.commercialsearch.com\/news\/intense-competition-fuels-capital-source-convergence-in-2018\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.commercialsearch.com\/news\/"},{"@type":"ListItem","position":2,"name":"Intense Competition Fuels Capital Source Convergence in 2018"}]},{"@type":"WebSite","@id":"https:\/\/www.commercialsearch.com\/news\/#website","url":"https:\/\/www.commercialsearch.com\/news\/","name":"Commercial Property Executive","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.commercialsearch.com\/news\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.commercialsearch.com\/news\/#\/schema\/person\/e7b65e0bddb12f2406dadf35eb67c6a1","name":"Sanyu Kyeyune","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.commercialsearch.com\/news\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/797379d6c9d8d994c21bf93f70e8931856c68310c11c7210c9a028cec55d0ced?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/797379d6c9d8d994c21bf93f70e8931856c68310c11c7210c9a028cec55d0ced?s=96&d=mm&r=g","caption":"Sanyu Kyeyune"},"url":"https:\/\/www.commercialsearch.com\/news\/author\/sanyukyeyune\/"}]}},"jetpack_featured_media_url":"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/02\/convergence.jpg","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/posts\/1004207098","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/users\/1245"}],"replies":[{"embeddable":true,"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/comments?post=1004207098"}],"version-history":[{"count":8,"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/posts\/1004207098\/revisions"}],"predecessor-version":[{"id":1004207806,"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/posts\/1004207098\/revisions\/1004207806"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/media\/1004207102"}],"wp:attachment":[{"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/media?parent=1004207098"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/categories?post=1004207098"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/tags?post=1004207098"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}