Q and A: KeyBank’s 2017 Capital Markets Outlook
John Hofmann oversees originations for KeyBank and lends on a range of strategies, targeting the niche preferences of the firm’s diverse customers. Hofmann shares his bird’s-eye view of commercial real estate lending and the forces that will shape the industry in the coming months.
CPE: What market trends have you observed during the past year, and how do you expect those to evolve in the near future?
Hofmann: One of the more notable things from 2016 was an uptick in international capital flows, on the debt and on the equity side. We’ve been seeing it on the equity side for some time, but it was interesting to see it flow into the debt space. The principals behind that money, they view debt as a late-cycle strategy, where you’re not taking last-dollar equity risk in markets where you’re above peak values.
We also saw non-recourse bridge lending–the debt fund product–pick up. In response to that, we also launched our own higher-levered, non-recourse bridge lending program. That space has continued to pick up, as people raise money to capture some of the maturities that will happen in 2017.