feature / FEATURE: CRE Deal Sizing

It’s not a typo. feature / FEATURE is a series where we’re giving you a tour of what makes Blooma so great. We created Blooma in partnership with banks, and together, we’ve designed a platform made up of features that have been intelligently designed with you in mind. Join us for a quick preview of some of our favorite ways to level up your CRE lending practice.

Next in the queue? Deal Sizing. Read through to learn more about what it looks like and how it works. Click the link to see it for yourself.

In the dynamic world of commercial real estate (CRE) lending, the intricacies of deal sizing hold profound implications, particularly in the face of current market challenges. Recent events, such as the staggering losses incurred by New York Community Bancorp on its commercial real estate loan reserves, serve as stark reminders of the critical need for precision in deal sizing. For seasoned CRE lenders, the urgency lies in understanding and navigating key factors impacting the industry today:

• Risk Management: With heightened economic uncertainty and mounting pressure on loan portfolios, precise deal sizing becomes paramount for effective risk management. The ability to accurately assess and mitigate risks associated with commercial real estate investments is central to preserving financial stability and profitability.
• Adaptive Strategies: In a landscape marked by fluctuating interest rates and evolving market dynamics, CRE lenders must adopt agile strategies for deal sizing. The capacity to swiftly adjust parameters and align loan structures with shifting market conditions is essential for staying ahead of the curve and capitalizing on emerging opportunities.
• Regulatory Compliance: Regulatory scrutiny of commercial real estate exposure is intensifying, placing greater emphasis on compliance and due diligence in deal sizing practices. Experienced lenders recognize the importance of adhering to regulatory guidelines and implementing robust risk management frameworks to navigate an increasingly complex regulatory landscape.
• Investor Confidence: In an environment where investor confidence is pivotal, transparent and informed deal sizing methodologies are critical for maintaining trust and credibility. Savvy CRE lenders understand that demonstrating proficiency in deal sizing not only instills confidence among investors but also enhances their competitive edge in the marketplace.

As seasoned professionals in the CRE lending arena, the ability to adeptly navigate deal sizing challenges is integral to sustaining success and resilience in an ever-evolving landscape. By staying attuned to market dynamics, embracing adaptive strategies, and prioritizing regulatory compliance, experienced lenders can effectively navigate uncertainties and capitalize on opportunities for growth and profitability.

Navigating Volatility with Technology

In today’s volatile market, technology emerges as a game-changer, offering sophisticated solutions to deal sizing challenges:

• Market Data and Analytics: Proptech platforms furnish real-time market data and analytics, empowering lenders to make data-driven decisions amidst uncertainty.
• Financial Modeling Tools: Advanced financial modeling tools streamline valuation processes, enabling accurate assessment of and risks associated with different deal parameters.
• Workflow Optimization: Leveraging automation features, including document parsing and deal screening algorithms, CRE lenders can streamline time-consuming tasks and minimize manual errors in the underwriting process. By implementing intelligent process automation (IPA) capabilities, efficiency is optimized, operational costs are reduced, and the time-to-value for CRE transactions and portfolio management activities is accelerated. Furthermore, workflow automation functionalities enable seamless collaboration and coordination among diverse teams and stakeholders involved in CRE lending operations, ensuring smooth and efficient workflow processes from start to finish.

Unlocking Blooma’s Deal Sizing Power

At Blooma, we’re committed to revolutionizing the CRE lending landscape. Our Deal Sizing feature empowers lenders with unparalleled insights and efficiency:

• Customizable Parameters: Set loan constraints effortlessly, including minimum debt yield, minimum debt service coverage ratio (DSCR), and maximum loan-to-value (LTV) inputs.
• Instant Insights: Quickly assess deal viability by inputting key metrics such as Net Operating Income (NOI) and property value.
• Streamlined Decision-Making: Make informed lending decisions with confidence, leveraging Blooma’s intuitive platform to navigate deal sizing complexities seamlessly.

How to Use It: 

After you’ve set your Net Operating Income and Property Value in the platform, set your loan parameters to determine your loan constraints. For each deal, Blooma allows you to select your minimum debt yield, minimum DSCR, and maximum LTV inputs to calculate the maximum loan amount based on each of these constraints. 

With Blooma’s Deal Sizing feature you can quickly and easily size up a deal based on your underwritten inputs and loan parameters. Have a Borrower’s or Broker’s proforma and want to see what your maximum loan amount is based on their NOI? Have you done your preliminary underwriting and want to understand if your loan amount shakes out to where it needs to be? Set the NOI, Value, and loan parameters to understand right away. 

Deal sizing isn’t just about numbers; it’s about strategic foresight and leveraging innovative tools to thrive in an ever-changing market. With Blooma’s Deal Sizing feature, commercial real estate lenders can unlock new levels of efficiency, agility, and success. Join us as we redefine the future of CRE lending, one deal at a time.