March Insights Newsletter
Welcome to this month's edition of Fidelity Bancorp Funding Insights! We're bringing you critical updates that matter most to multifamily investors and commercial real estate professionals.
This month, we're diving deep into the current California lending landscape with our exciting new 9.25% bridge loan program for multifamily properties. We'll also unpack the latest capital markets dynamics, including treasury movements and emerging trends in apartment market absorption that are reshaping investment strategies.
9.25% FIDELITY SMALL BALANCE BRIDGE
Exciting news! Fidelity Bancorp Funding now offers bridge loans at 9.25% for multifamily properties in California. Available for strong and experienced borrowers, simply reply to this email or click here to get a free quote.
Multifamily properties located in California
$1 million - $20 million loan amounts
65% loan-to-value
12-month terms (longer with approval)
Investor Insights
Rates Are Right Back Where We Started
The anticipated wave of distressed multifamily assets remains elusive, according to one key takeaway by John Burns Research (JBR) from the NMHC annual meeting in late January.
Interest rates are almost exactly where they were a year ago. However, CRE players remain hopeful for a drop in rates. Tariff concerns, new recessionary fears, declining consumer confidence, and heightened consumer inflation expectations, combined with the Federal Reserve remaining in a holding pattern, likely mean more of the same.
According to a new Colliers report, $384 billion of loans initially set to mature before 2025 have now been pushed into this year, accounting for approximately 40 percent of the $957 billion in CRE debt due in 2025. That’s a 42 percent jump compared to 2024’s total of $270 billion. Is this the year of reckoning, or will lenders be able to continue kicking the can down the road?
Credit is currently plentiful, according to the SLOOS survey and anecdotal reports from participants re-entering the market after a hiatus. This month's inflation reports were better than expected, and interest rates might stay flat or even decrease. More than three-fourths (76%) of the 200+ commercial real estate industry leaders polled last month by TD Bank for the CRE Finance Council in Miami said they are excited about the opportunities this year could bring.
Despite the optimism, if interest rates do not go down, the only way transaction volume will begin to pick up is if cap rates go up, or, put differently, if there is more downward pressure on property values. Without a better spread between interest rates and cap rates, deals simply do not make sense unless there is a significant value-add component. Some markets are already seeing a lot of pressure, multi family in Texas being one of them.
Will Investors Buy More This Year Than Last?
Time will tell if commercial real estate transaction volume will increase this year.
“Lending spreads have improved, but I’m not sure they will be enough to result in meaningful increases in volume, all else equal,” Dillon Freeman, Senior Commercial Loan Officer at Fidelity Bancorp Funding, said.
CBRE’s data show a steady increase in monthly bidder activity, particularly in value-add assets. It will be interesting to see where this goes.
Loan of the Month
Excited to announce the successful closing of a $1.9 million DSCR loan for an 11-property rental portfolio in Philadelphia. The loan included a cash-out component and a significant rate reduction—from mid-8% to an incredible 6%. Congratulations to Dillon Freeman for structuring a solution that provided both added capital and interest rate savings for the investor. Strategic refinances are game-changers for growing rental portfolios.
