SAN FRANCISCO–(BUSINESS WIRE)–Portico, the largest independent commercial mortgage bank in the United States, achieved $1.07 billion in new commercial mortgage originations across all major property types during the first quarter of 2022. As the market disruption Due to a series of significant economic forces putting upward pressure on rates and tightening underwriting criteria, Gantry’s production totals hit early guidance for a strong start to the year. Expectations remain for a productive year ahead with a wide range of lending sources actively pursuing 2022 allocation targets, with variable rate allocations set to increase significantly.
“Our first quarter production totals have met expectations year-to-date, with lenders and borrowers remaining active and resilient in response to inflationary forces and global economic disruption from the war in Ukraine,” said Gantry Director Andrew Mekjavich. “Commercial real estate will remain a favored allocation for capital, but we expect the upward pressure on rates to create challenges for property owners looking for the last dollar of leverage, with the most competitive debt being reserved for the most conservative owners.”
Notable trends in relevant Gantry verticals include:
Production
Gantry issued a total of 111 unique loans in the first quarter of 2022, meeting quarterly performance expectations. During the period, the company funded loans from more than 60 unique sources of capital. Life insurance company and bank lenders accounted for more than 85% of loans funded, with agency lenders and bridge lenders responding to demand for higher leverage investments and value-added acquisitions in the multifamily market, respectively. Banks and credit unions continue to be an attractive source for medium-term loan structures, with bridge lenders becoming the preferred source of value-added financing. Additionally, life insurance companies continue to venture into the bridging loan space in search of short-term returns to offset inflationary forces and are now competing with loan funds and alternative lenders for properties in transition or in the process of stabilization.
“Our first quarter production is a direct reflection of the unique combination of correspondent lenders we represent, the cautious clientele we serve and the skilled staff in our nine country offices,” added Mekjavich.
Key trends to consider from Gantry’s Q1 2022 production totals include:
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Expect the pace and magnitude of planned Fed rate increases to accelerate in the coming quarters, which will put overall economic pressure on higher commercial real estate rates.
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Spreads rose to as much as 50 basis points above typical thresholds as lenders sought to mitigate risk caused by unexpected economic disruptions earlier in the year.
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Expect Agency lenders to become less accessible to market-rate multi-family developers as Freddie and Fannie enforce prioritization of affordable housing allowances.
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As interest rates rise, cap rates will compress, which could affect asset pricing and slow the pace of new investment, a trend that could become apparent as early as the summer.
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Viable alternatives to CMBS structures are emerging in the long-term permanent and fixed rate financing market, particularly in multi-family markets.
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Expect a significant increase in the availability of floating rate capital in 2022 from a range of capital sources, including fixed rate lenders historically looking for shorter term yield.
Culture
Gantry marked its 30th year of continuous operations as a leading commercial mortgage banking platform, independently owned and operated in partnership by its board of directors of leading producers, which still includes its founders. This milestone was celebrated last March at a private summit in Phoenix attended by a national roster of affiliated lenders to discuss key issues and expectations for commercial mortgage financing in 2022, followed by a business retreat focused on on team building and cultural enrichment programming.
Maintenance
Gantry, a long-time Senior Servicing Officer rated by Standard & Poor’s, continues to deliver nearly 100% of expected performance from its managed commercial mortgage portfolio, which now stands at nearly $18 billion, spanning over of 2,100 loans in 43 states. These loans represent financing across all asset classes, including hospitality, which remains the most contested asset class post-pandemic.
About the gate
Gantry, a privately held company headquartered in San Francisco, is a full-service mortgage banking company with an extensive line of correspondent lenders utilizing Gantry’s origination, closing and servicing capabilities. Founded in 1991, Gantry currently has nearly 90 professionals in regional offices across the western United States and New York with more than 40 production teams that generated more than $5.1 billion in 2021. The platform -the nearly $18 billion company’s national service form represents more than 2,100 loans located in 43 states. Gantry is rated as a Primary Servicer by Standard & Poor’s and is one of the few non-banking/unlicensed insurance companies to have this designation. For more information, please visit gantryinc.com.
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