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Flush with Liquidity


Brian Stoffers, Global President of Debt and Structured Finance, talks with Hiroshi Okubo, Head of Research, Japan, about the market dynamics fueling the abundant supply of debt and equity, recent changes in underwriting, and variation in regional trends around the world.
Abundant Capital Sources

Capital is plentiful as traditional players, such as banks and life companies, compete with new debt funds and a stable number of lenders in the commercial mortgage-backed securities (CMBS) arena. The government-sponsored entities (GSEs) Fannie Mae and Freddie Mac remain significant players in the multifamily market, originating approximately $150 billion in loans in 2018. Solid risk-adjusted returns have fueled the rise of debt funds, with more than 200 players in the U.S. market, and potential for consolidation in the future.

Disciplined Underwriting

Conservative standards are the norm today, particularly after the global financial crisis, which saw the collapse of many CMBS lenders, as well as the life company losses of the 1980s and 1990s, when delinquencies topped 7 percent.

Variations Across the Globe

In nations where central bank indices remain in negative territory, industry players are searching for opportunity abroad, for example, Japanese lenders moving into Australia. Japanese lenders also prefer participation loans, in which they pair up with lead lenders to originate the commitment, and then buy down the positions post-close.

Digital Transformation

CBRE professionals utilize proprietary software that allows them to track transactions and lending sources in real time and optimize capital structures for borrowers. The technology empowers teams to choose the right lender for the right asset under the best terms. In 2018, CBRE closed more than 2,400 transactions with over 356 different lenders in the U.S. alone.

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Contributors

Brian Stoffer Headshot
Brian Stoffers
Global President, Debt & Structured Finance
Capital Markets
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Hiroshi Okubo
Head of Research, Japan
Japan
+81 3 5288 9288