Abundant Allocations from Broad Spectrum of Lending Sources Targeting Commercial Real Estate, Health of Commercial Real Estate Markets, and Attractive Rates & Terms Fuel Company’s Strongest Production Year Ever; $17 Billion Servicing Portfolio of 2,100 Loans Performing 100% at End of Year
San Francisco, Calif. – Gantry, the largest independent commercial mortgage banking firm in the U.S., completed $5.15 billion of commercial mortgage placements during 2021, marking the company’s strongest year ever for annual production totals. Strong performance from most commercial real estate asset classes post-pandemic, an active investment market, compelling incentives for refinancing assets at current valuations, and rates that remain at generational lows are expected to carry similar momentum into 2022.
“2021 was an exceptional year for Gantry with $5.15 billion of total production, which exceeds our previous best year of production by nearly $1.5 billion for context,” said Michael Heagerty, Principal with Gantry. “Commercial real estate markets remain extremely active as investor capital continues to migrate to the sector as a preferred investment option and sponsors capitalize on the strong environment for refinancing legacy debt. The pipeline shows a continuation of 2021 activity levels moving into 2022. Even with anticipated impacts from Federal Reserve actions and tapering of post-pandemic economic stimulus, we anticipate the commercial mortgage debt markets will remain in a climate of generationally low interest rates.”
In terms of total capital allocations, 2021 commercial mortgage originations are defined by the following (ranked in descending order):
Asset Class: Multifamily, industrial, office, retail, retail, and self-storage as top asset classes.
Loan Volumes: Life companies, banks, agencies, and credit unions as top funding sources.
Loan Values: Life companies, banks, agencies, and credit unions for total loan values.
Notable trends in relevant Gantry verticals include:
Production
Gantry originated a total of 509 unique loans in 2021. Life company, bank and agency lenders were the most active sources for Gantry’s clients and all lending sources, including CMBS and private debt funds, remain active at the onset of 2022. Life company lenders were particularly active in 2021, providing extremely attractive long-term debt placements for a variety of investment acquisitions and refinancings, with banks holding as the primary source for new construction financing and local borrowers, and agencies as top competitors on multifamily assets. CMBS lenders continue to be an option for higher-leverage loan structures, and private debt funds continue to be a viable competitor for bridge and permanent financings.
Key trends to consider from Gantry’s 2021 production totals include:
Lenders, which remained active through all 12 months of 2021, increased their allocations to commercial real estate last year and are expected to maintain or increase these allocations in 2022.
Gantry produced loans for a record 144 different capital sources in 2021 showing the depth of the US capital markets for commercial mortgage debt. Despite the variety of lenders, over 65% of Gantry’s production was still closed by its correspondent lenders, consistent with prior year results.
An abundance of capital sources in the commercial mortgage space bodes well for borrowers in 2022 with competition from lenders for qualifying assets shaping attractive terms, especially for experienced sponsorship with a demonstrated track record.
While incremental increases can be expected in 2022, rates will continue to remain at what are historic lows compared to previous cycles. This bodes well for maturing and near maturing debt in the marketplace, as well as investors funding new investments.
Lenders will continue to prioritize the multifamily and industrial asset classes in their targeted allocations, with retail and office assets also seeing increased completion for financings from the spectrum of capital sources. Hospitality assets remain challenged in securing prime rate financing due to ongoing performance challenges post-COVID.
Self-storage assets have continued to grow in favor with institutional lenders due to the asset classes strong performance and fundamentals, which bodes well for qualified sponsors in the asset class seeking prime rate debt.
Servicing
Gantry continues to see near 100% of expected performance from its more than $17 billion portfolio of serviced commercial mortgages spanning more than 2,100 loans in 43 states. These loans represent financings in every asset class, including hospitality, which remains the most challenged asset class post-pandemic. Gantry expects this trend to remain constant for the foreseeable future as the economy and asset performance continues to stabilize post-COVID.
Culture
Gantry has made a full return to office throughout its regional offices. The company relocated three of its regional offices during 2021, using the opportunity presented by pandemic disruptions and remote working to modernize and upgrade its work environments to advance a full return to office in 2022. The new spaces include those serving the firm’s Los Angeles, Orange County and Portland production teams. Gantry is making similar improvements to its San Francisco headquarters at the beginning of 2022, with this office working in temporary space until completion of improvements, expected by the end of Q1 2022.