Real Estate Lending Environment “Incredibly Strong”: JPMorgan Chase

Real Estate Lending Environment “Incredibly Strong”: JPMorgan Chase
Sarah Borchers…
Mar. 23 2021

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JP Morgan’s Chad Tredway says the market is chasing high-quality assets.

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The real estate lending market is “incredibly strong” and arguably even better positioned than it was prior to the pandemic, according to Chad Tredway, managing director and head of real estate banking at JPMorgan Chase.

In a video interview with Nareit, Tredway noted that the market is “flush with capital,” all chasing high-quality assets.

Banks are taking a very thoughtful approach to lending, Tredway observed. Most came into the pandemic much better prepared than they were ahead of the financial crisis, with a heightened focus on structure, borrower quality, and asset types. “Because of that, the real estate industry has really held up,” he said.

Lenders are looking for a few main types of assets, according to Tredway. Most lenders want to lend on multifamily, while industrial has “definitely been a favorite.” The market is also starting to firm up a bit on lodging and retail lending, he added.

“What you’re finding right now is that banks are struggling to underwrite some of the properties that were struggling before COVID-19, but banks have a lot of conviction around multifamily, around build to suit, and around industrial,” Tredway said.

And with interest rates at such historically low levels, real estate is an “amazing alternative” given that it’s inflation-protected, drives yield, and can be appropriately levered, Tredway said. “We are seeing cap rates at historic lows…as rates stay low and people need yield, we expect that trend to continue,” he added.

Turning to SPACs, Tredway pointed to a proliferation of target-rich tech opportunities for real estate companies. He expects the pace of SPAC activity to grow in 2021, and potentially in 2022 as well.

Tredway also commented on diversity and inclusion issues, noting that JPMorgan Chase has made a $30 billion pledge to help with the racial equity gap. “As an industry, I believe that if we all come together, we can make diversity a real priority,” he said.

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