U.S. office market is showing signs of recovery, supported by positive return-to-office trends, increased leasing activity, limited new construction and stabilizing interest rates. It notes that current market dislocation has created opportunities for senior first mortgage lending with historically attractive yields and conservative loan structures. CIM Group argues that lower property valuations and stronger credit metrics may offer enhanced downside mitigation for lenders in the office sector.
According to the firm’s recent white paper, traditional lenders have pulled back from office lending, resulting in a shortage of capital providers and higher spreads for willing lenders. It describes how senior first mortgage loans secured by quality office properties can offer income-driven, equity-like return potential due to these market conditions. The report emphasizes
