Borrower profile: Monday Properties sees slow capital markets reboot

Despite commercial real estate’s slow start to the year, Monday Properties anticipates the potential for more acquisitions and developments.

Monday Properties, a real estate investor and developer that earlier this year broke ground on a South Carolina multifamily development with Glenmont Capital Management, expects a slow reset for the commercial real estate capital markets.

“We are still early in 2023 and at this point we don’t expect the capital markets will step out before the second, third or even fourth quarter of this year,” said Frank Craighill, senior vice president of development. “There will likely be some banks and institutions that will be able to sell existing loans that are maturing at a loss in order to reinvest the capital into new loans.”

The New York-based manager was able to line up financing for The Willow, a planned 338-unit, Class A multifamily community slated for delivery toward the end of the first quarter of 2024, via a $48 million construction loan from Sandy Springs Bank.

This is the third time the firm has worked with Sandy Springs over the past three years, with the lender financing Monday Properties’ development of a 300-unit complex in Charleston as well as its acquisition of Park Plaza I & II, a Rockville, Maryland office complex.

“During periods of economic uncertainty like we are seeing right now, the capital markets landscape is changing, and having a strong working relationship with lenders is essential,” Craighill said. “Being able to rely on existing partnerships and relationships, is critical to being able to successfully transact on new construction loans and or refinancing existing debt.”

These relationships will be key as the firm works to expand its multifamily lending platform through ground-up development and acquisition not only in Charleston but in the greater Southeast.

“In addition to looking at new markets, we are also doubling down on existing home markets outside of Washington, DC, and the New York regions,” Craighill said. “The post-covid landscape has reinforced multifamily as a safe and high-demand investment with key differentiators.”

Despite commercial real estate’s slow start to the year, Monday Properties anticipates the potential for more acquisitions and developments, including some unique opportunities stemming from higher interest rates and wider loan spreads.

There are some opportunities in which the firm could come in on strong deals where the sponsor is constrained by near-term debt maturities. These opportunities could arise in the office sector, where net operating income is often lower than it was three to seven years ago, or in the multifamily sector, Craighill added.

“I think this presents an opportunity to acquire debt at well below historical values. It is at moments like this, when markets are tightening and most investors are pulling back, that often turns out to be the best time to invest,” Craighill said. “We have capital ready to deploy and are in a very strong position to take advantage of the unique opportunities that can materialize when there is a market rebalance.”