2nd Quarter Newsletter
It is hard to believe; we are already halfway through 2026. The 2nd quarter was active on all fronts. The Carolina Hurricanes won the Stanley Cup, the Knicks won the NBA, and the University of North Carolina almost won the College World Series. The World Cup captured our hearts, and grit prevailed, as Spain was victorious. Unfortunately, the war in Iran continued, and interest rates were volatile, going from 4.32% on March 31, 2026, spiking on May 18 to 4.69%, and ending the second quarter at 4.42%.
Grit defines Medalist Capital: we work hard for our Borrowers, we work hard for our Lenders, and we work hard for each other. Medalist Capital closed 30 loans in the second quarter for $410 million. Medalist Capital closed 62 loans and was just short of a billion in loans in the first half of 2026 (43% in multifamily, 15% in industrial, 14% in retail, 10% in office, and 18% in other). The real estate market continues to exhibit recessionary-like trends for the third or maybe fourth straight year. The oversupply of multifamily lingers on with hopes of rental growth now realistically not coming until early 2027. Construction costs remain high and new development is sparse. Equity is hard/impossible to find, but the lending markets are robust. The volatile interest rate market has impacted the transactional market, as buyers and sellers still cannot seem to close the pricing gap. The market is dictated by those who must transact or refinance and those who do not have to transact - i.e., kick the can down the road. The bridge market is hot, with over 100 active bridge lenders willing to lend into the wait-and-hope world: providing cash-out loans and interest carry, which offers the opportunity for owners to hopefully capture the expectation of rent growth, higher NOIs, and lower cap rates. We will see. Debt Funds have provided much needed capital to pay off bank loans, which has created an aggressive bank lending environment. I had one banker recently increase their loan to cover 100% of my borrowers' cost. The theme here was, "I would rather lend $5 million more than have a $20 million payoff." Our Life companies provide stable, reliable capital. Life companies can lock the rate at loan application, which takes the volatility out of play. Medalist Capital represents 34 life companies on a correspondent basis. The Medalist Capital lender stable is the strongest in the market. There are many capital sources available in the market, including life companies, banks, CMBS, debt funds, and private capital. Your Medalist Capital representative is an expert in the capital markets space and can source the very best debt solution for your specific situation. We work hard for our Borrowers (grit).
In closing, the market is likely to remain volatile. As I am a glass-half-full guy, there do appear to be positive trends on the horizon. The oversupply in the multifamily market will finally be absorbed. The investment sales market will return, the debt markets will remain constant, and overall fundamentals will strengthen. We are fortunate to be in strong markets with great growth trends. As we say at Medalist Capital, "tape'em up". We are ready to battle for you.