Executive says they expect Q4 production to be their best yet
Commercial mortgage bank Gantry has reported a steady increase in new loan production as it heads into the fourth quarter of 2023.
Despite a lower year-over-year volume, the firm anticipates a strong close to the year, fueled by rate-locked transactions, upcoming maturities, and new asset pricing in the context of higher interest rates.
“Market conditions are beginning to normalize and build in a new rate climate, so much so that every quarter of 2023 has exceeded the prior quarter,” said Tom Dao, principal at Gantry. “We forecast that our fourth quarter production will be our best quarter of 2023 with a solid pipeline already lined up for the first quarter of 2024 with maturity forwards. This can be directly correlated to near-term maturities and movement towards price discovery during a higher cost of capital market cycle.”
Gantry said it collaborated with 43 lenders during Q3 2023 to secure various loans, including permanent, bridge, and construction loans. Most of the loans were acquired from Gantry’s correspondent life company lenders. In terms of asset classes, multifamily, retail, and mixed-use dominated the loan production, followed by self-storage, industrial, office, and hospitality.
Dao noted concerns in some markets, particularly the office sector, due to leasing challenges and upcoming maturities.
“However, we are pleased to report strong performance from our portfolio and maintain confidence in the endurance of CRE fundamentals across all asset classes where leverage is conservative and sponsorship is active,” he said in the company’s news release.
Adam Parker, another principal at Gantry, highlighted the active role of Gantry’s correspondent lenders in 2023. He said: “Our correspondent lenders have been instrumental this year, filling the gap left by traditional banks and other capital sources that have scaled back. We’re currently working with these insurance company correspondents to devise loan structures that we believe will gain traction in 2024.”
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Parker also emphasized the importance of flexibility in today’s market, stating that most borrowers are now leaning towards three- to five-year term loans, hoping for a more favorable rate environment in the future.
“Banks can be competitive, but many of them are not active. Credit unions are attractive in today’s environment due to their flexible prepayment penalties,” Parker said. “Debt funds are tightening their underwriting criteria but are still accessible for shorter-term loans with a well-defined exit strategy. While CMBS remains an option for borrowers seeking higher leverage, it faces challenges from interest rate volatility.”
As for its servicing portfolio, Gantry services over 2,100 commercial mortgages valued at approximately $18 billion across 43 states.
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