The intense growth Central Florida has undergone over the last decade will, like the global economy, face a blow as lenders struggle to respond to the abrupt shutting down of business and giant sell-offs in the stock market.
“When you underwrite a loan you forecast whats going to happen over the property performance life and of the loan life of the investment….How do you do that right now?” Paul Fiorilla, director of U.S. research at Yardi Matrix, told GrowthSpotter.
“It’s really hard to say when everyday more and more parts of the economy get shut down.”
GrowthSpotter contacted several banks and commercial real estate lenders for the story. Several representatives were not immediately available to respond or declined to comment.
Sandy Hostetter of Truist Financial Corp., formerly SunTrust and BB&T, said the bank is selectively considering new CRE financing opportunities.
“We are cognizant of near term changes in market conditions that will affect how we strategically underwrite and size each respective loan and our appetite for certain asset classes,” she wrote in an email.
Tom White of Centennial Bank, who also serves on Kissimmee’s Chamber of Commerce, told GrowthSpotter the bank is still providing financing for real estate projects and acquisitions on a “case-by-case basis.”
Shelly Brantman out of Bank OZK’s Zephyrhills office said they are also offering lending for commercial real estate at this time.
“As of right now, the only change is that we aren’t doing in person meetings. So everything is via email or phone,” she said.
There’s a wide divergence of reactions in the commercial real estate lending industry, Fiorilla said.
“Some [lenders] are still trying to do new deals, some are funding deals that were in the works up until now, but not taking new applications. Some have dropped out entirely.”
All asset classes and investors are bound to be impacted, he adds. Multifamily and industrial are safer bets, while investments in retail and hotels are going to be harder to fund at this time.
“It’s going to be difficult to maintain the pace of lending,” Fiorilla said.
Multifamily occupancy rates will likely fall and industrial markets may experience issues with supply chain. Co-working spaces may also struggle, as more people work from home, he said.
“[Orlando] still relies on tourism more than most places. If the social distancing phase of coronavirus continues for a length of time, it could mean big impacts to places like Orlando and Las Vegas.”