Description

In today's episode, Willy welcomes Kris Mikkelsen, Ivy Zelman, and Aaron Appel. Kris Mikkelsen is the Executive Vice President of Walker & Dunlop Investment Sales and is responsible for the origination and execution of investment sales and equity capital raise for multifamily assets focusing on the Southeastern markets. Ivy Zelman is the Executive Vice President of Walker & Dunlop Research and Securities. She is also the CEO of Zelman & Associates, a leading housing research and investment banking firm acquired by Walker & Dunlop in 2021. Aaron Appel is the Senior Managing Director of Capital Markets at Walker & Dunlop. He focuses on sourcing and structuring financing for all commercial real estate asset classes nationally. The episode starts with Ivy stating that the overall underwriting has significantly changed in terms of stringency and more conservative rent assumptions due to the uncertainty of capital cost. Kris explains that negative sentiment shows across the board because of the low supply index. A hawkish stance remains unless employment figures hike up. Core plus value-add multifamily assets have liquidity but cost more, according to Aaron. If borrowing costs increase substantially, less is needed to pay for the asset. Talking about his recent bridge loan, Aaron mentioned a good spread for the lender in loan value versus loan amount. Ivy adds that overall rent growth is holding up at levels of renewal basis; however, renewals will be stickier. Her forecast for rent growth is above 4.5% and moderation to 2%. The data is much more optimistic compared to new move-in rates. She also describes how more competition, such as in the supply from build-for-rent (BFR) operators or investors selling single-family rentals (SFR), is expected in 2023 and puts more pressure on decelerating rents. Affordability is also a factor for for-sale builders to turn to the rental market and sell units on a scattered basis. Tune in to this new episode of the Walker Webcast — State of CRE with Kris Mikkelsen, Ivy Zelman, and Aaron Appel. ▶️ Key Points In The Webcast: 00:35 Willy welcomes Ivy Zelman, Kris Mikkelsen, and Aaron Appel 02:34 State of capital and underwriting 07:37 Financing and a bridge loan 10:06 Rent growth, competition, and move-in rates 15:52 Challenges in construction loans 17:17 Anecdotes on the challenges and a probable cause 23:51 Private capital, BREIT, and inflation 29:04 Possible relief of inflationary pressures 32:57 A leeway for certain markets 37:20 The biggest issue in the financial system 39:10 Mortgage and low leverage 41:22 SFR/BFR and a hopeful forecast 44:35 Land development 46:04 What smart money is doing now GET NOTIFIED about upcoming shows: » Subscribe to our YouTube channel here: / @walkerdunlop » See upcoming guests on the #WalkerWebcast here: https://www.walkerdunlop.com/webcasts/ Related webcasts: Tune in on Wednesdays for fresh perspectives about leadership, business, the economy, commercial real estate, and more! #WillyWalker hosts a diverse network of leaders as they share the wisdom that cuts across industry lines.