At any given time, according to the Mortgage Bankers Association, the size of CRE loans on US properties is $4.5 trillion. Over the next 12 months, over $600B of those loans will become due. Although, historically, only 25% of maturing loans are refinanced, with rising interest rates, many of these loans will not be large enough to pay off the maturing loans.
To underscore this point, recently, a nxtCRE ‘lender verified’ Must-Buy-Investor (MBI) was presented with an acquisition opportunity of a property purchased in 2020 at sub 4 cap with an 80% LTV bridge loan that is now coming due. Although there was a significant increase in rental income, it was not sufficient to offset the effects of raising rates on sizing a new loan to pay off the bridge loan.
Although the property owners’ original plan was to refinance the bridge loan with a permanent loan, to refinance today would require the owners to put in a significant amount of additional equity. Putting in new equity (rescue capital) just to refinance is a very expensive proposition which makes selling the property a more attractive option. But, in a market where most buyers are keeping their powder dry, finding a buyer that can buy now is a challenge unless they find an MBI which in this case they were able to do on the nxtCRE platform.
According to Adam Sharif, founder and chief strategist of nxtCRE, the Miami-based CRE fintech platform that partners with CRE financial institutions, giving those institutions ‘line-of-sight’ to their borrowers’ upcoming equity reinvestment and debt funding needs: “The dominant force in the CRE market is a constantly replenishing army of 70,000 investors who are reinvesting their equity from a sale to acquire some $400 billion of CRE properties using $150 billion in equity and $250 billion in debt.
“We call these exchange investors ‘lender verified’ MBIs – ‘Must-Buy Investors.’ Sharif says, “Working with us is a no-brainer as we differentiate ourselves from others in the industry: We are fast, accurate, and confidential. And we are the only platform that quickly matches and connects with ‘lender verified’ MBIs.”
Sharif explains how nxtCRE can help: “Imagine you’re a commercial real estate investor who recently sold a property and is now facing a hefty tax bill. Using the tax code, taxes from the sale can be deferred by reinvesting the cash from the sale to acquire another property. Working with our lender partners, we’re able to identify these MBIs 75 to 90 days before their selection deadlines and match them with great opportunities that otherwise may not become available to them.
“We’re not a listing service,” says Sharif, “and users will not be able to go to our site looking for a list of MBIs or list of properties for sale. But if you’re a property seller or seeking CRE equity, you upload your property info and, much like a dating site, you’ll be matched with multiple ‘lender verified’ MBIs to whom you can choose to submit your offering. CRE Brokers and Sellers can register, list their properties, and get matched with MBIs at no cost on the nxtCRE platform. CRE lenders nationwide partner with nxtCRE to gain digital ‘line-of-sight’ to their borrowers’ equity reinvestment and acquisition funding needs.”