Covid-19 and Commercial Loans Trends 2021
What is the biggest challenge you anticipate in 2021 as a direct lender or financial intermediary in commercial real estate?
In 2021 it will be challenging to meet the business needs of Borrowers using hotel/restaurant properties as collateral to secure their loan. In 2020 Universal Commercial Capital had to discontinue its commercial lending on such properties and we expect that will be valid for the current year as well. In the last 10 years the hospitality industry was blooming, multiple new hotel brands entered the market which had led to heavy investment in the sector and financing opportunities for many real estate professionals. In the last year the pandemic hit the hardest the travel sector which changed rates of occupancy and drastically decreased revenues. Travel rates won’t be back to the pre-pandemic level until 2024 (IATA) thus most likely lower LTVs ratios for hotel buildings will be offered even when the pandemic is over with.
Also, the declining trend in the demand of office spaces will resume its current path. The “smart” work style is showing higher employee’s productivity and reduces company’s operational expenses thus many organizations will not be returning to physical offices after the Covid-19 pandemic is over.
Where do you see the biggest business opportunity in commercial real estate for your company in 2021?
The evolving technologies are changing the industrial premises and we have seen a lot of applications for warehouses. Also, medical retail has been one of the very fast growing market segments and is likely to be one of the top sellers for 2021.
In what way(s) has the COVID-19 pandemic affected your company’s day-to-day operations?
UCC had implemented the home office work style long before the pandemic begun. We were a step ahead thus no drastic change in our day-to-day operations was needed. As of our Borrowers being affected, we had to assist them obtain some of the required paperwork online as majority of the City Hall buildings were closed for in-person visits. Additionally, mobile notaries were used for signing loan documents.
What property sector(s) is your company most bullish on in 2021 and why?
The rental housing demand will follow its growth trend in 2021; therefore, we are optimistic about the future of the residential real estate properties.
Universal Commercial Capital, Eric Tran, CEO