Western States CREF: What we heard and what we learned

The annual Las Vegas gathering of commercial real estate lenders and originators was held the first week of September, attended by nearly 900. While that number was down from a pre-Covid high of 2,500, those who attended were in deal-making mode, assessing the impact of interest rates, the potential looming recession, and re-pricing of CRE assets.

PACE Loan Group’s team included Managing Director Jerry Ellis, SVP Matthew McCormack, and Business Development Director Ina Montejo. Each of them shared key learnings from the event, including how they see the next few months of commercial real estate lending.

“Although attendance was down over previous years, those who attended were engaged and interested in hearing about how C-PACE can fill out their capital stacks with so many traditional lenders on the sidelines. C-PACE is being used for many more reasons than purely enhancing leverage, which makes the education of senior lenders much less of an uphill battle,” said McCormack.

“There was still some fear about potential trouble looming in the next 12 months, but I stressed to them that in volatility, C-PACE can reduce the cost of capital and actually get deals over the finish line,” said Ellis.

There was still some fear about potential trouble looming in the next 12 months, but I stressed to them that in volatility, C-PACE can reduce the cost of capital and actually get deals over the finish line

In addition, in a panel of senior lenders, many of them said that previous crises have taught them to kick the “can” down the road, rather than forcing repayment or refusing to work with borrowers. “Kicking the can down the road will do less damage to the market,” according to senior lenders.

Another note from that senior lender panel was the stress of rising interest rates. “Interest rates were higher in the 90s, the 2000s and even before the great recession.  We were always able to complete deals. We were used to cheap interest rates for the last two years – and that was abnormal. We’re in what was the original normal.”

Ina Montejo, who has been in the industry over three years – and in C-PACE for two, said education is still key. “We are still having to educate other lenders about C-PACE so every opportunity to be an ambassador and educate the industry about how C-PACE can lower the cost of capital in every property type. Since people are working harder to get the same deals done, we can offer C-PACE as a way to complete the capital stack faster,” she said. 

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