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The Bridge to 2023 – Trust Experience, Embrace Opportunity

December 9, 2022
Authors: Blake Hering
Publishers: HFO Apartment Investor Newsletter | 2022

by Blake Hering, Principal, Gantry

There is no doubt that we are in a shifting market climate, with significant headwinds emerging in 2022 that will carry into 2023. That being said, for many of us who have weathered a storm or two during our careers, these are not entirely unchartered waters. All cycle shifts have their own root causes, but we have been here before. Headwinds are not currently at gale force, and in several ways, real estate remains the haven for smart money. It’s important to remember that when markets are turbulent, people still get profitable deals done. Take heart. In today’s market, there is no shortage of debt capital at pricing that remains conducive to transacting efficiently. 

Multifamily market fundamentals remain sound. Supply and demand are in proper balance in most markets, and performance of most assets remains stable. In fact, many markets remain undersupplied. At Gantry, our $18 billion servicing portfolio of loans is performing at 100% post-COVID. That is a telling statistic for the strength of real estate in the current cycle. Gantry does business with more than 144 lenders and capital sources, has already placed $4.0 billion of loans through Q3 2022, and we are already in early talks for transacting at amenable terms in 2023. 

The question many are asking is, how do you properly assess risk to achieve a viable return in this climate? Our correspondent life company lenders are still pricing long-term debt at attractive rates. This is extremely relevant for those concerned with rate volatility as life companies lock rates at the time of application, often many months in advance of funding. Life company long-term debt is pricing well below shorter-term alternatives. Other capital sources also remain potentially viable funding options, with agencies, regional banks, and credit unions actively competing for loans. We can also structure loans with amenable early exit clauses to offer additional flexibility.

So, when times are uncertain, my best suggestion is to keep it simple. The key to optimizing investments in a volatile market is to acknowledge the pertinent realities and transact accordingly. Find that right person with capital markets expertise to help analyze and structure the right solution for your specific investments. Whether that’s me or someone else, you want to find the person who can see the entire landscape for what it is and help you to properly assess risk to match your return objectives. 

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