In this episode of PlotLines, Britni sits down with Andrew Dansker, Founder and CEO of Dansker Capital Group, to look at why commercial real estate lending has stalled and what it will take to get deals moving again. His firm has placed about $1 billion in loans across more than 200 transactions in the past year and a half.
What keeps Andrew up at night is a lack of deals. His clients tell him there's nothing to buy, and his lenders tell him they have no new deal flow.
Borrowers have stopped waiting for rates to fall. Since rates started climbing in the spring of 2022, borrowers have asked Andrew for floating-rate or short-term loans so they wouldn't lock in before the expected drop. That drop never came, and recently borrowers have started to accept it. Lenders kicked the can on loans that didn't work for refinance, but with no clear timeline for those loans to make sense again, decisions were forced. Andrew expects that to start affecting the market this year or in 2027.
His advice is to take the pain now. If a wave of owners sells at once, cap rates rise and values fall, and he'd rather be at the front of that line. Many owners are stuck. At 80 or 90 percent LTV, they may have no basis left, and an owner who bought through a 1031 exchange can't replace that debt, leaving a tax bill many can't pay.
Retail is holding up better than multifamily. Less retail has been built in recent years, while multifamily faces overproduction and, in some places, regulatory issues. Multifamily landlords carry the risk of taxes, insurance and other costs, while retail tenants often carry some or all of them. Even with parallel rent growth, retail sees stronger net operating income growth.
Rewriting The Headline
When Britni asked Andrew to write his own headline, Andrew pointed to the golden period from the end of the Great Financial Crisis through COVID, when rates were low, capital was plentiful and values were rising. That ended in the spring of 2022, and he says the market has been going through the five stages of grief since. His headline: "I think 2027 is the year of acceptance."
