One of the challenges in 2022 could be finding the right financing partners in a market that is becoming increasingly crowded.
“From the borrower’s perspective, you need to find the right structure and the right partners,” said Martin Braun, founding partner of Nexus Capital Advisors.
He added that traditional lenders are focused on top quality product and if opportunities do not tick all the boxes they will not proceed. “It’s important to think about alternative financing strategies – a combination of mezzanine, whole loan providers and, of course, different sources of debt financing,” Braun told Real Asset Insight’s Richard Betts.
He said the situation will continue for up to two years.
Banks are wary of some asset classes that have been hit by the health crisis, such as hospitality. But Braun points out that the sector will recover so it is worth investing in good opportunities in anticipation.
However, retail without a food component is “quite challenging”, Braun adds.
ESG and likely compliance of an opportunity is also affecting banks’ attitudes and there is potential for assets to become “stranded”.
But demolishing these is the worst outcome Braun points out. “The challenge will be to find ways to improve the assets to an extent that they will be acceptable from an ESG perspective, so that will be an opportunity for investors but also for lenders.”
Click on the video to watch the full interview or listen to the podcast below.