ING Real Estate Finance believes the US multifamily market will continue to be a positive place to allocate capital in the coming year.
The firm was expecting to have closed one or two more deals before year end 2021, bringing its total activity to more than 20 transactions and more than $1.5 billion of lending commitments, said Craig Bender, managing director and head of real estate finance. Much of that activity has been in multifamily.
“Most of what we will have done will be in multifamily apartments and a bit in logistics,” Bender told affiliate title Real Estate Capital USA, citing a $250 million logistics loan on an Amazon-leased building ING originated in October. “We continue to be bullish on the multifamily market.”
ING Real Estate has originated loans across the US, including deals in Minneapolis, Portland, Las Vegas, Oakland, Washington, DC and parts of Florida.
“It’s been a wide geographic mix and for apartments we are more flexible in terms of the markets we will consider than we might be for office,” Bender said. “In terms of office, we are more focused on the top five to 10 markets, but we will definitely go beyond that for multifamily.”
While the firm’s office lending has been limited, it has seen a small amount of activity from owners that want to upgrade lower-quality buildings to higher-quality properties. “I think the real question, however, is where do rents shake out. A lot of older buildings have a lot of character, and it is part of the branding,” Bender said. “I think some companies want to be in a more unique space than a large glass tower.”
As the year draws to a close, ING is looking ahead to the transition toward SOFR as the expected benchmark for floating-rate loans after LIBOR’s expected sunset on December 31.
“We have been talking about this transition for some time and believe it is a positive,” Bender said. “There are a lot of legacy loans that will have to transition to SOFR, and the market seems to be quickly coalescing around SOFR as the benchmark.”