You're invited to a special webinar featuring Peter Kaufman, author of, "Poor Charlie’s Almanac: The Wit and Wisdom of Charles T. Munger". A legendary businessman and the longtime CEO of Glenair, Peter will share his insights on the timeless bestseller about his close friend, the late Charlie Munger.

David Frosh, CEO of Fidelity Bancorp Funding, said coastal markets have very low cap rates and transaction volume is still very low.

“Cap rates are up almost everywhere, but the two primary data points are distressed deals and really good deals,” Frosh said, adding that the data set is obviously accurate but not helpful because of limited and unique data.

“In healthy markets, cap rates should be 150 to 250 basis points over interest rates. The real question is what happens to mortgage rates once the Fed starts dropping rates. Will mortgage rates follow? It is not certain.”

Watch the complete webinar as John Burns, the founder of John Burns Research and Consulting, Mark McLaughlin, President of Compass Real Estate, and David Frosh, CEO and Managing Partner of Fidelity Bancorp Funding, discuss the most important insights and trends facing real estate including:

• Housing Market Trends

• Affordability & Inventory

• Interest Rates & Mortgage Trends

• Demographic Trends

• Job Growth Impact

• Multi-family Housing Market

• Market Observations & Insights

In some cities, the surge in building has meant there are more apartments than can be quickly leased without cutting rents, making some investors skittish about adding more units. 

But banks have other issues that keep them from lending as much to apartment builders this year. Many regional banks are souring on the commercial real-estate loans already on their books. 

“Their current portfolios are getting marked down and they don’t have that much to lend,” said David Frosh, chief executive of Fidelity Bancorp Funding, a California real-estate lender.

That means developers need to raise more cash from investors to build. But many investors are more cautious today, as rent growth flattens and new projects look less profitable at today’s higher interest rates and construction costs. 

“The numbers don’t add up,” Frosh said.

What makes Fidelity Bancorp Funding better is simple: we lend from our own balance sheet which provides complete discretion on funding decisions. With Fidelity, what we offer is always what you get. While we will always be competitive with rate and term, if we say “yes” to a deal, we will fund.

Join us for our next live webinar featuring John Burns, the founder of John Burns Research and Consulting. With a career dedicated to helping housing executives make informed decisions, John's expertise understanding current and future trends tied to housing demand, supply, affordability, and design is not to be missed. The highly regarded advisor, thought leader, and speaker has over 740,000 LinkedIn followers with 23,000 subscribing to his free weekly emails. This webinar will focus on:

• A first look into the findings shared in John's upcoming best-selling demographics book, Big Shifts Ahead: Demographic Clarity for Businesses.

• Providing insights into upcoming housing market trends including what to expect from demand, supply, and affordability.

This event is not to be missed so register now and we look forward to seeing you there!

Earlier this month, Rithm completed a $500mm rated securitization of RTL Loans, the second such rated securitization since Toorak completed the first rated RTL securitization earlier in Q1. RTL loans refer to “fix and flip” loans, typically of short <18 month duration which are utilized to acquire and improve a (typically SFR) property, often with high leverage levels 80%+.

Getting a rating from an agency means that the asset class opens up to a new class of institutional fixed-income investors via these securitized products. This kind of positive development indicates a maturing industry with continued investor appetite, despite decreased volume of overall activity in the market from post-pandemic peaks.

David Frosh, CEO of Fidelity Bancorp Funding, tells GlobeSt.com that he believes the $1 trillion in maturing loans this year will be refinanced or sold at cap rates 100bps to 200bps above interest rates.

“New loans or sales will not pencil unless cap rates are higher,” Frosh said.

Fidelity Bancorp Funding, Inc., a leading financial institution specializing in commercial real estate, multifamily, single-family residential bridge loans, and permanent financing, is pleased to announce that Dillon Freeman has been named Senior Loan Officer focused on the San Diego Region.

Prior to Fidelity Bancorp Funding, Dillon worked a combined seven years at Pacific Premier Bank and then Axos Bank. He served in various roles covering origination, credit, portfolio management, special assets, and relationship management.

Dillon’s deep lending experience combined with being both a CFA and licensed Broker set him apart from the rest in his ability to get loans done and provide excellent customer service.

Dillon was a wrestler at Briar Cliff University where he achieved all-conference honors as a team captain and qualified for the NAIA National Wrestling Tournament as a freshman. He obtained his BS in Management Science from UC San Diego. Dillon lives in San Diego with his wife and one-year-old son Walter.

By David Frosh, CEO of Fidelity Bancorp Funding

nvestors in commercial real estate and multifamily housing should be less concerned about the Federal Funds rate and more focused on the potential scarcity of capital in the debt markets going forward.

Given the consistent 40-year drop-in mortgage interest rates from 18 percent in 1981 to under 3% in 2021, I think we’ve all forgotten the many potential drivers of these rates. For all the deserved attention on the Federal Funds rate, it seems that many have overlooked an important principle: the Federal Funds rate does not directly impact mortgage rates. Instead, its influence is felt heavily in Treasury bonds, usually 10-year Treasuries, which have historically been a significant determinant of mortgage rates. But not the only one. Factors like GDP, unemployment, housing demand, and inflation also weigh heavily on mortgage rates and often without a direct relationship to the Fed Fund rate or Treasury Bond yields.

Others in the CRE community, however, disagree with CBRE’s prognosis. The CRE capital markets have many well known issues that will make borrowing difficult in the year ahead, these experts say.

“The lending market is far from stable,” David Frosh, CEO of Fidelity Bancorp Funding, tells GlobeSt.com even though interest rates have stabilized. “The 3% to 4% loans coming due total more than $1 trillion. New financing will most likely be in the high 5% to mid-6% range and loan-to-values (LTV) will be lower.

“These loans are upside down and it is going to create a huge problem for banks and investors.”

Please join us for a private interactive webinar for Fidelity friends and investors as we host our friend John Silvia, President of Dynamic Economic Strategy and former Chief Economist of Wells Fargo. You may recognize John from his regular appearances on CNBC, CNN, BNN, Fox Business News, The Wall Street Journal, Financial Times, and other publications.

Not every potential investor, however, is ready to buy just yet. Some see bigger discounts in the near future as distress picks up.

David Frosh, CEO at the specialty lending firm Fidelity Bancorp Funding Inc., for instance, said that banking executives in recent months have begun to inquire with him "every other week" to gauge his interest in purchasing commercial property loans they hold.

None have grabbed his interest however, he said, because they're not being offered at sizable enough markdowns.

"At the end of the day, the defaults are coming," Frosh said. "How big and when, I don't know."

By David Frosh, CEO of Fidelity Bancorp Funding

Throughout 2023, economists and stock market analysts found themselves notably off the mark in their predictions, surpassing even their usual dismal results. Contrary to expectations, economic growth has exceeded the vast majority of projections. Amazingly a significant uptick in interest rates was met by continued growth in national housing prices. No one predicted this.

To grasp the significance of the current economic landscape, reflect on the fact that a person needs to be approximately 36 years old to have navigated through a prolonged recession as an adult. From 1981 to 2021, interest rates plummeted by a staggering 2,000 basis points and markets for both debt and equity soared all over the world (the S&P 500 increased approximately 10x during this period). Despite numerous forecasts of an impending downturn in the face of higher interest rates, the economy has remained robust. The question now looms: where are interest rates headed? The answer seems elusive, leaving even seasoned analysts without a clear trajectory. My bet is that analysts will continue to be wrong. More importantly it should not matter to investors.

Join us at the Winter Forum on Real Estate Opportunity & Private Fund Investing next week. Charlie Woo, President, is featured on a fantastic first panel, "Interest Rates, Inflation & Bank Activity: Macroeconomic Factors Impacting CRE". Get there early on day one and reach out if you are attending!

A key part of this will be construction lending, which has faced the same difficulty as other parts of the financing markets. The slow down in lending has meant there are sponsors seeking financing to complete or start work on projects who are finding themselves without viable lending options, Omori explained.

“Some of the loans we will be doing will be bridge loan situations or situations in which a client needs more funds for project overruns,” Omari said. “We could also work with borrowers who are looking to reposition a property, either something they owned or an opportunistic purchase where there is some upside potential. Also, we are interested in a limited basis in ground-up construction deals.”

The firm will focus on smaller, local builders in the multifamily sector. “The large, institutional builders, both on the residential and multifamily side, will always get their capital. We are focused on the borrowers who are building projects that are 50-75 units. These loans are getting done, just at a much slower pace,” he added.

Fidelity Bancorp Funding, Inc., a leading financial institution specializing in commercial real estate, multifamily, single-family residential bridge loans, and permanent financing, is pleased to announce that John Omori has joined the company as Senior Vice President of Construction Financing. Omori will be tasked with launching the company’s construction financing division.

“With traditional banks being capital constrained especially for construction lending, it’s important that we provide a platform to our clients to alleviate those pressures,” stated David Frosh, CEO of Fidelity Bancorp Funding. “We are confident that John will be a great asset to our clients and team as we continue to expand our business.”

John Omori joins Fidelity Bancorp Funding following tenures at Bank of Hope, First Foundation Bank and Umpqua Bank where he specialized in multifamily and commercial real estate loan originations and underwriting of complex ground up projects.