Advice for Navigating CRE Financing in the Pandemic: Stay Patient & Keep Focused

October 20, 2020

Advice for Navigating CRE Financing in the Pandemic: Stay Patient & Keep Focused

October 20, 2020

Specializing in affordable and HUD/FHA transactions, Gemma Geldmacher discusses COVID-19

The COVID-19 pandemic has impacted access to capital sources across the multifamily industry. Many lenders have tightened up credit standards or stopped lending altogether, leading to an uptick in interest in the programs offered by the U.S. Department of Housing and Urban Development (HUD).

Today, HUD activity is busier than ever, with a virtual avalanche of requests being submitted in the last few months. While HUD has been reviewing and closing deals at an unprecedented rate during this unprecedented time, and many find HUD to be the answer, it is important for borrowers to recognize that HUD financing is not always the right fit for every deal. Over the past seven months, I’ve advised clients on the importance of staying focused and remaining patient throughout the financing process more than ever before, and we often realize together that a quick “no” is better than a slow one.

Advising Clients on Suitable Financing Solutions

At Berkadia, where we are consistently at the top of the list of HUD lenders nationwide, our HUD pipeline is the largest it has ever been. Our work with HUD production offices across the country has allowed us to secure financing for our clients regardless of where they and their projects are located. And like us, during this unique time, our HUD partners have reached historic volumes and workloads that they are working through. As a result, in all geographic areas, but some more than others, HUD has increasingly limited capacity to take on new loans.  Like any lender in that situation, HUD has become more selective with its approvals. Given this shift, we have made it a priority to be honest with clients and set realistic expectations with them, guiding them on their quest to secure financing during the pandemic.

As advisors, we tap into our years of experience and market insights to provide clients with options that align with their specific goals for their properties. We are truly capital source agnostic. If a HUD loan isn’t the right fit, we’ve pivoted lending applications to alternative lending sources, such as GSEs, life insurance companies, debt funds or banks. Sometimes this happens upfront, other times we pivot further down the path. But every step of the way, we stay focused on ensuring each financing is attributive to goals and remain patient in setting all parties up for success.

Lessons That Will Last Beyond the Pandemic

When it comes to securing HUD financing, patience is key. The process can be lengthy, sometimes even taking over a year to close deals. Staying focused during the process is essential. I counsel my clients to control their own part of the process and remain laser focused on what’s in their court to achieve the next step. My experience as an underwriter for over 10 years helps me prioritize what’s outstanding in every step and keep clients focused on the diligence that’s critical to keep everything moving.

Our Commitment to Our Clients & Partners

At Berkadia, we are stewards of our clients’ time and energy. Like our partners at HUD, we work towards the common goal of providing quality affordable housing across the country. Especially during these unusual, difficult times, we continue to build strong collaboration between our clients and HUD to achieve everyone’s objectives.

Ultimately, we are still learning from the pandemic and assessing what it means for our industry. However, we expect an incredibly strong end to the year and continued pipeline growth into 2021. We look forward to finding new opportunities to work with clients, helping them better their business strategies in the future. With patience and focus, our clients’ goals can be achieved.

-Gemma Geldmacher, Senior Director