NEW YORK, April 10, 2017 /PRNewswire/ -- Amherst Capital Management LLC, a BNY Mellon investment boutique specializing in U.S. real estate, today released a new white paper, "Transitional Lending – The Sweet Spot in CRE Investing," which argues that lending in the approximately $50 billion transitional commercial real estate ("CRE") market has the potential to provide a better risk-reward opportunity than other CRE sectors in the current investing environment.
To read the complete whitepaper, "Transitional Lending – The Sweet Spot in CRE Investing," click here.
"Our data shows that the CRE market has traditionally overvalued in-place cash flows and undervalued the long-term income generating potential of transitional properties," said Sandeep Bordia, Head of Research and Analytics at Amherst Capital. "We believe that lower leverage and higher spreads associated with transitional loans, combined with favorable occupancy trends in transitional properties, point to a potentially attractive risk-reward opportunity in transitional lending."
In the paper, which is backed by comprehensive data and analysis from the largest CRE sectors, Amherst Capital describes several factors for why the firm believes in the value of a transitional lending strategy in CRE investing. These factors include:
The CRE market heavily discounts transitional properties. Amherst Capital believes that the market tends to undervalue the long-term income generating potential of transitional properties and that lenders typically overestimate the risk for transitional property loans.
Transitional properties strongly outperformed in occupancy gains from Q4 2011 to Q4 2016, which justify price improvements. Amherst Capital's data demonstrates that transitional properties with low occupancy have historically shown clear signs of increasing occupancy over time; these improving occupancies may result in potential value gains for transitional properties.
Transitional CRE lending potentially presents an attractive risk-reward opportunity. Demand for low-leverage transitional loans will remain strong, according to Amherst Capital's analysis, and leverage through warehouse financing or the securitization market can support the earning potential of these investments.
"Amherst Capital's focus on transitional lending is an important example of our long-term commitment to serving institutional investors in the U.S. real estate markets through vertically-integrated capabilities," said Sean Dobson, CEO and CIO at Amherst Capital. "By pairing real asset sourcing and management expertise with our market-leading analytics, we believe that we have built a unique offering in the asset management industry."
Amherst Capital's vertically-integrated lending platform is led by a team of deeply experienced CRE professionals, the majority of whom have worked together for nearly a decade. This deep bench of industry expertise is underpinned by rigorous investment guidelines and enhanced by the firm's proprietary data and analytics platform.
About Amherst Capital Management Amherst Capital Management LLC is a real estate investment specialist with approximately $5.7 billion of assets under management. Amherst Capital was established in 2014 as a majority-owned subsidiary of BNY Mellon, and is minority-owned by Amherst Holdings, LLC. Amherst Holdings is not an affiliate of BNY Mellon. Texas Treasury Safekeeping Trust Company is a founding seed investor of Amherst Capital. Amherst Capital offers traditional and alternative real estate investment strategies to private and institutional investors globally. Amherst Capital's investment strategies are grounded in deep intellectual capital and proprietary technology designed to help clients meet their portfolio needs. For more information please visit www.amherstcapital.com
About BNY Mellon BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment management and investment services in 35 countries and more than 100 markets. As of December 31, 2016, BNY Mellon had $29.9 trillion in assets under custody and/or administration, and $1.6 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on www.bnymellon.com. Follow us on Twitter @BNYMellon or visit our newsroom at www.bnymellon.com/newsroom for the latest company news.
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