News

In Disney’s 2019 animation hit, Frozen II, Princess Elsa sings a harrowing song called “Into the unknown,” as she heads into a world that she has not seen before.

Similarly the real state capital markets are headed “into the unknown” in 2021, a year that is framed by polarizing optimism and pessimism as we manage through a continuing global pandemic that no one has (thankfully) experienced in their lifetime.

With the Presidential Elections now behind us, we have a little less uncertainty about what the future will hold from an economic and regulatory standpoint allowing all of us to focus on the challenges of the pandemic.

The commercial real estate industry continues to face challenges as the pandemic has accelerated trends, such as Internet shopping, and given rise to regulations, such as eviction moratoriums,

Economic uncertainty is changing lending practices, but that doesn’t mean there isn’t financing available for commercial real estate in Los Angeles.

The trick, though, is finding that financing and getting the right terms.

“Whatever underwriting people were using in January and February has clearly changed now,” said Kevin Shannon, co-head of capital markets at Newmark Knight Frank. “The loan terms — they are getting so dramatically different from what they were.”

While some lenders are “afraid to make bad loans,” Shannon added,

Latigo Group has locked in $59 million in construction financing for a 152,000-square-foot multifamily development in the northwestern part of Greater Los Angeles, according to Dekel Capital, which arranged and announced the funding.

Dekel said the financing was provided by a publicly traded real estate investment trust and a life insurance company.

Latigo has started work on the project at 299 East Thousand Oaks Boulevard, which will be the first significant multifamily project in Thousand Oaks since 2007.

LOS ANGELES — Los Angeles-based Dekel Capital, on behalf of Los Angeles-based CGI Strategies, has secured $47.8 million in non-recourse construction financing for the development of a multifamily community located at 837 S. Fedora St. in Los Angeles.

Provided by a national lender, the loan will be used for the construction of a seven-story concrete and wood building over two levels of subterranean parking in the Koreatown neighborhood.

The global spread of the coronavirus is the unexpected event the U.S. commercial real estate industry feared would halt the country’s longest period of economic expansion. But when rent or mortgages come due, lenders are expected to exercise some level of flexibility to soften the blow. Wikimedia/Sparkx 11

While these are still early days in what some economists are already calling a recession, banks are expected to take a different tone in this downturn compared to the last.