During the COVID-19 pandemic, there are been many speculations about how the private lending industry will fair and what recovery timelines will actually look like. Recently Sharestates CEO, Allen Shayanfekr, and Director of Business Development, Michael Ramin, hosted a webinar with the National Real Estate Investor. The topic for discussion was Navigating the New Reality Real Estate Recovery Planning in an age of Uncertainty. Below we’ll explore each of the questions posed to the Sharestates team as well as link directly to the video clip for each answer.
What was the real estate borrowing climate like before March 13, 2020, when the president declared a national state of emergency, and how has it changed since then?
Michael Ramin discusses how private lending rates and construction trends have changed following stay-at-home orders.
What did the debt capital picture look like before the declaration of emergency, and what has changed since mid-March?
Allen Shayanfekr discusses how the debt capital space has changed since the earlier days of private lending to just before the Declaration of Emergency. He also explains what the landscape looks like now.
Are there any areas of borrowing and lending that are picking up as a result of the coronavirus crisis, and, if so, what are they?
Michael Ramin discusses how developers are still active looking into non-performing loans, REOs, and other foreclosures since the Declaration of Emergency.
Do you see institutional investors shifting their attention to any particular areas of interest as a result of the crisis, or are they being tightfisted? What about retail investors?
Allen discusses how institutions are now facing margin call issues following the COVID-19. He also shares the importance of diversifying your capital sources between individuals and institutions.
What are going to be the short-term and long-term effects on real estate borrowing and lending, and what can platforms that facilitate these transactions do to encourage more activity?
Michael discusses his view of the market going forward. Specifically, lenders putting an even larger emphasis on borrower track records.
What about on the institutional side? How will the access to and the cost of capital be affected over the next year, and is there anything investing platforms can do to encourage the infusion of new capital coming out of this crisis?
Allen projects a continued slow down in investing for at least 6 to 9 months. Key indicators that capital markets are beginning to open up again will be the first investments made. Many investors do not want to be the first to begin business as usual.
In some areas of the country, state governments have ordered operations to cease in certain sectors of the economy, particularly non-life sustaining businesses. Real estate development is one of them. How has that impacted the deal sponsorship side of the house?
Michael discusses the impact of a pause of work order for non-essential real estate developments. He highlights the importance technology plays in states still allowing construction through options such as E-closings.
What’s that look like from the capital side of the house. Are investors still looking for deals and can’t find them, or have they noticed a slowdown? How do they feel about it?
Allen sheds light on how investors are still looking for discounted legacy pre-COVID products as well as new, valuated and tested products established for the post-COVID world.
How are real estate terms, risk assessment, and underwriting practices changing in the face of the crisis?
Michael sheds light on how lenders have readjusted their lending parameters following the COVID-19 pandemic. This includes even more stringent underwriting policies.
What kind of terms are investors seeking now? Have they adjusted their expectations?
Allen shares investor appetite prior to COVID-19 and how that appetite has changed since the pandemic.
Give me your best and worst-case scenarios for the economy and then for private lending in real estate.
Allen shares his outlook for the economy and private lending spaces.