July 10, 2001

Commercial Mortagages: Plenty of Capital Available

As a recent survey conducted by Multi-Housing News suggests, "debt lenders for the second quarter expressed some worry about the state of the larger economy and commercial mortgages. However, although there are pockets of market softness, loan delinquencies remain low, and the demand-supply picture for multifamily is still fundamentally sound, they say. Interest rates may not be as low as borrowers might expect or want - having ticked up a few months into the year - but commercial mortgage providers insist this is as good a time to lock in commercial mortgages. As if to prove a point, commercial mortgage lenders claim they have become even busier since the beginning of the year." These same concerns about the economy are being reflected in underwriting and "sizing" standards for most commercial mortgages and commercial property types among the debt providers.

We're still seeing relatively strong demand for acquisition financing and commercial mortgages, as investors continue to trade properties and look for ways to capitalize on commercial mortgage opportunities. REITs are playing a role by divesting some of their holdings and opening up supply to private and institutional investors.

Although lenders may take a slightly more cautious look at underwriting an asset's NOI, there is still plenty of capital available to finance investments and commercial mortgages with solid fundamentals. Where lenders may tighten their LTV restraints, we believe there will be an increased role played by opportunistic mezzanine funds. Often times, investors will look for less expensive mezzanine debt rather than raise additional equity, and where the delta between debt and equity exist we'll see the mezz providers front and center.

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With an extensive lender and commercial mortgages network, Steelhead Capital has built its reputation on structuring commercial mortgages and commercial real estate loans requiring both debt and equity placement. Fluctuations in the capital commercial mortgages present significant challenges for investors and we are pleased to provide financing, as well as, guide and advise its clients through the process of obtaining commercial mortgages. Whether you are looking for apartment financing, commercial financing, commercial mortgages, or creative "out of the box" real estate loan alternatives, we can help.

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