We've recently noticed more than one phone number or name associated with your registered email address.

To ensure we have the most up to date contact information for you,please visit the My Profile page.


Rumblings on the SBL Frontier

It wasn’t long ago that commercial banks dominated CRE lending in the small-balance market. That supremacy is facing increasing challenges from a plethora of non-bank lenders including debt funds, marketplace lenders, private lenders, specialty finance firms and selected life insurance companies among others.

The maturing credit cycle has already proven to be a brake on some CRE lending among commercial banks as they recalibrate their appetite for riskier small-balance loans under $5 million that may involve, e.g., transitional properties, new construction, high leverage and/or DSCRs, and non-MSA locations, among other factors. The tremendously popular and successful multifamily small-balance lending programs from Freddie Mac and Fannie Mae have also substantially re-shaped the competitive scene of late. But while depositories can typically maintain an edge for solid CRE credits with better loan pricing, their ultimate and long-term threat lies in the speed and efficiencies to close loans that some non-banks have achieved with liberal use of technology.

And so while historically commercial banks held all 15 of the top spots in the league table and commanded a national market share percentage in the mid-twenties, that has now changed:  Boxwood’s research indicates that commercial banks’ overall market share narrowed to 19% last year; and, conspicuously as the nearby graph shows, two non-banks cracked the lineup as both CBRE Capital Markets (#3) and Greystone (#12) benefited from their prodigious Agency lending programs. 

New waves of capital have proven advantageous to traditionally underserved small property owners, investors and Main Street businesses. Total 2017 volume of nearly $230 billion in SBL originations was massive and, from a casual distance, the space may look like wide open and placid terrain. Yet to a better trained eye, the SBL landscape is now a dynamic and shifting frontier with nimble players challenging incumbent commercial banks like never before.