Organic Activity and Acquisition of Triad Capital Partners in Strategic Midwest Markets Grows Loan Servicing Portfolio by $2 Billion To Date in 2024; Price Discovery and Stabilizing Rate Climate Fuel New Acquisitions and Refinances as Market Moves Towards Normalization

Gantry, the largest independent commercial mortgage banking firm in the U.S., is reporting a significant increase in new commercial mortgage production for Q3 2023, with a nearly 10% increase over both Q2/Q1 totals. While the recent Fed Funds rate cut infused some much-needed optimism into market sentiments, its impact has been marginal on commercial real estate lending rates with treasuries experiencing upward movement since the announcement. Regardless, rates remain at year-over-year lows and should continue to improve into 2025 barring unforeseen market disruption.

“Conditions for commercial real estate finance have consistently improved throughout 2024, and economic conditions continue to support performance in most of the major asset classes excluding office,” said Andy Bratt, Principal with Gantry. “In that climate, Gantry has continued to focus our production teams on providing strategic counsel to our clients and lenders to optimize their debt and finance programs in what has been a challenging market cycle. The addition of experienced production teams in the Midwest with our acquisition of Triad Capital Advisors is a strategic continuation of that goal, bridging Gantry’s dedicated presence coast to coast from key markets.”

Representative transactions from Gantry’s Q3 2024 production include:

Industrial: $15.5 Million Acquisition Financing / Fullerton Brea Business Park – Fullerton

Multifamily: $40 Million Refinance / The Mercer Apartments – Seattle

Self Storage: $12 Million Refinance / Lockaway Storage – San Antonio

Retail: $12.8 Million Bridge Acquisition Loan / Carson Plaza - Carson

Mixed Use: $15.5 Million Refinance / Lake View Village – Lake Oswego

Office: $21.4 Million Construction Takeout / Culver City Creative Office – Los Angeles

Production and Trends

Gantry has seen a steady improvement of the commercial mortgage and related debt and equity markets throughout 2024, with rates down significantly year-over-year and remaining less volatile. Liquidity in the market remains abundant even with the retreat of local and regional banks from active new loan origination. Gantry’s correspondent insurance lenders and a roster of vetted capital sources continue to prioritize their ready allocations to industrial, multifamily, retail, and self storage assets. As price discovery emerges in a less volatile rate climate, office assets are qualifying for select bridge and permanent debt programs. Where performance can be documented or plans from experienced sponsors articulated, most assets are finding manageable bridge finance options for acquisitions and refinances on un-stabilized assets still in transition.

“Our production teams have successfully financed the range of major asset types in the third quarter, and the overall climate continues to improve as rates become less volatile,” said Blake Hering, Principal with Gantry. “A key to our success in Q3 2024 is a focus on providing portfolio-centric financing counsel that can mitigate the struggles of salvageable assets challenged in the current cycle with proceeds from cross-collateralized or easily financed properties. This holistic approach is a primary focus of our commercial mortgage banking operations and long-term loan servicing rapport with our borrower clients.”

• While the political climate remains heated as the election nears, current Federal monetary policy should remain consistent with market expectations into 2025.
• Geopolitical volatility and current regional conflicts are potential major market disruptions out of the control of real estate professionals. We can only prepare for navigating unforeseen economic disruption.
• The recent September Fed Funds rate cut is the beginning of what is planned to be a series of cuts expected to continue this year and into early 2025. A morale booster for now, with the potential to blossom into significant relief from debt service strain.
• This first Fed Funds rate cut will have minimal impact on improving commercial mortgage rates as the market had already adjusted in advance of the announcement.
• The upward pressures on treasuries has moved yields above 4% from a consistent high 3% range following the rate cut, however with spreads tightening in a less volatile capital markets cycle. These slightly higher rates are still holding at year-over-year lows.
• Gantry’s long-standing and often exclusive correspondent relationships with a roster of insurance lenders is providing consistent access to one of the most stable and attractive debt providers in the current cycle. Many lenders are already preparing and making commitments on their 2025 allocations.
• With most local and regional banks sidelined, insurance lenders have become the preferred source of permanent, non-recourse, fixed rate commercial mortgage debt.
• Office assets are consistently being financed with a small but growing pool of lenders identified by Gantry as the market resets values and assets begin to trade again.
• Bridge to bridge is a refinance structure that works for many assets still in transition or with an actionable plan in place to improve performance.
• CMBS is a structure returning to popularity, finding relevancy with its maximized leverage potential and non-recourse and often full-term interest only terms.
• Agencies have yet to hit their maximum allocation targets, and have programs tailored to the current rate climate that can include interest only, 40-year amortization, and non-recourse terms. Their best rates and terms are reserved for properties meeting their affordability criteria.
• Industrial and multifamily remain the top allocation targets for most lenders, with self storage and power center, grocery anchored, and neighbor retail following suit.
• Gantry’s Loan Servicing portfolio continues to perform with improvement in debt coverage ratios and occupancy levels for the portfolio from 2023.

Culture

Gantry established a dedicated office presence in the Midwest to close out an active Q3 2024, acquiring the production operations and servicing portfolio of Triad Capital Advisors, an independent commercial mortgage banking firm with more than 30 years of successful operations. As a result of the transaction, two senior Triad Capital Advisor producers have joined Gantry as equity partners, with Mark Reichter and Joe Monteleone each taking on the title of Principal, operating from their respective offices in Kansas City and St Louis.

Servicing

Gantry maintains its long-running distinction as a Primary Servicer rated by Standard & Poor’s. With the acquisition of Triad Capital Advisors and organic production growth, the firm has grown its national loan servicing portfolio to $20 billion to date in 2024, encompassing over 2400 unique loans across the full range of CRE asset categories. The firm's portfolio has consistently performed during a tough market cycle, with expectations for continued performance into 2025. The breadth, depth, and capability of the firm’s servicing division provides the foundation for Gantry’s strong and often exclusive correspondent relationships with many of the nation’s leading life insurance companies and conduit lenders.

About Gantry

At Gantry, independent thinking is in our genes. As a privately held firm, we take an intentional approach to everything we do. So, as our industry consolidates and becomes less personal, we push ourselves to ignore convention, to set a high standard and to always prioritize people ahead of profits. With over 30 years of experience of loan production and managing a $20 billion national servicing portfolio, our firm leverages a well-established correspondent-driven platform to construct the best financing solutions for our clients. For those seeking a partner that delivers more, we’re a little different. The right kind of different. To find out how and why, click here: www.gantryinc.com

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