News December 02, 2022

When the Fed's no longer a friend

The Real Deal reported that rising interest rates are forcing lenders to the sidelines. The Fed has increased rates to 4 percent from near zero in less than a year and that’s spurred dealmaking. Distressed funds are now well positioned to step up as banks retreat. Debt funds like Madison Realty Capital have also stepped in. The firm recently launched its sixth debt fund with a $2.25 billion target. Its co-founder Josh Zegen said the firm is seeing opportunities to lend where the borrower has to secure a new loan either because of cost overruns or a loan coming due. Madison provided an additional $167 million on an existing construction loan for a four-building apartment complex in Jersey City, increasing the loan total to $395 million. “Banks only want to do business right now with their best clients if they have capital availability,” said Zegen. There is “not much new loan growth from banks.”

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