Multifamily Leads Production Volumes Followed by Office and Self-Storage
Assets; Lender Allocations and Sources Remain Abundant as Optimistic
Institutional Discipline Emerges for Active 2Q2019
SAN FRANCISCO–(BUSINESS WIRE)–lt;a href="https://twitter.com/hashtag/CRE?src=hash" target="_blank"gt;#CRElt;/agt;–Newmark
Realty Capital, Inc. (NRC), the largest independent commercial
mortgage banking firm in the western U.S., closed $316.5 million of
commercial mortgages during 1Q2019 across 56 transactions. Toward the
end of the first quarter, interest rates dropped significantly. NRC
believes the sudden drop in interest rates has contributed to their
increased activity and the expectation of much greater production in
“Underwriting and performance are holding true across our servicing
portfolio for the start of 2019 and we are confident in current market
fundamentals anticipating a strong 2Q2019,” said Michael
Heagerty, principal and CFO with NRC. “Market analysts are watching
for a major cycle correction; however, this correction could be just as
likely a series of minor adjustments as we reach a manageable plateau.
Barring any unforeseen events that might disrupt market conditions, we
move into 2Q2019 with genuine confidence.”
NRC 1Q2019 commercial mortgage production was led by multifamily, office
and self-storage assets in descending order of value of funds placed.
Additionally, NRC’s San Francisco, Los Angeles and Phoenix production
offices led the firm’s production totals. NRC services a national
“We begin each year with the MBA’s national conference and then Newmark
hosts a lender summit in Phoenix, AZ with more than 40 lenders in
attendance,” said Adam
Parker, principal with NRC’s Phoenix production office. “At both
events, we heard many of our lenders outline their increased appetite to
lend more in 2019 in comparison to 2018. With increased lender
allocations, we are projecting the marketplace to be hyper competitive.
As lenders compete for business that means it is a good time to be a
Additionally, NRC’s principal leadership offered the following trends as
worthy of consideration moving into 1Q2019:
2019 Production – NRC remains optimistic for commercial mortgage
production in 2019 barring significant or sustained interruptions to
the domestic economy.
2019 Interest Rates – Most lender economists anticipate interest rates
remain in relative equilibrium as market fundamentals indicate no
drastic change in macro-economic conditions. NRC concurs.
– Gender and racial parity and inclusion programs are driving today’s
professional best practices in commercial mortgage finance. NRC can
point to a national trend of state by state legislation compelling
compliance with this sound business practice.
Workouts – Local market dynamics and project specific challenges
require a focus on navigating distress in even healthy up-cycle
markets. NRC has yet to see a negative shift in the performance of its
$12 billion loan servicing portfolio, however best practices require a
renewed focus on the new data and proper analysis of the portfolio as
commercial real estate economists discuss cycle shift and submarket
stresses become apparent.
Capital Sources – NRC works with more than 70 lenders each year, and
allocations are abundant in 2019. Expect to see growth in capital
sources pursuing a finite number of primary market placements, and
continued interest in pursuing value in secondary and tertiary markets
where underwriting and local market economic fundamentals meet risk
Multifamily – Everyone must live somewhere, and all trends point to a
continued lack of housing supporting underlying values, strong
performance and new multifamily development. NRC continues to be a
leader in creative solutions for multifamily assets in all phases of
the ownership cycle; and continues to source appealing rates and
structures for this asset class. NRC has leadership roles in its major
trade associations and is particularly interested in staying on top of
upcoming GSE reform efforts.
Self Storage – This relatively boutique asset class continues to offer
compelling fundamentals for underwriting and performance. NRC expects
it to be an active asset class in 2019.
About Newmark Realty Capital, Inc. (NRC):
Newmark Realty Capital, Inc. (NRC), a privately held company based in
San Francisco, is a full-service mortgage banking firm with an extensive
lineup of correspondent lenders utilizing NRC’s production, closing and
servicing capabilities. Established in 1991, NRC is currently staffed by
over 70 employees in regional offices throughout the western United
States. The company’s national servicing platform valued in excess of
$12 billion represents more than 1,300 loans located in 40 states. NRC
is rated as a Primary Servicer by Standard & Poor’s and is one of a
select few non-banking/non-insurance chartered companies with this
designation. For more information please visit www.newmarkrealtycapital.com.
Peter Vestal / Newmark / 415.946.6242
Chris Egger / CME Mar Comm /