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Capital is Coming Back: Key Takeaways from the Western States CREF Conference
September 2025

Key Highlights

The Talonvest team recently attended the Western States CREF Conference where overall sentiment was generally optimistic amidst signs of increasing deal activity and lenders demonstrating greater willingness to compete.
Spreads have compressed to their lowest levels of the year, creating more favorable financing terms and bringing stalled deals back to market.
Favorable dynamics, including the introduction of new lending programs, reflect confidence in long term fundamentals.
The Talonvest team recently attended the Western States CREF Conference where attendees signaled that debt capital activity continues to pick up as the year progresses. Financing has become more widely available, deal activity is increasing, and optimism appears to be strengthening. The positive sentiment is being driven by ongoing developments across the landscape, including tightening spreads and increased engagement from life companies. Additionally, creative strategies such as retroactive C PACE structures are taking a larger role in shaping the landscape. While underwriting discipline is intact, lenders are showing a willingness to compete. At the same time, equity shows signs of gaining momentum, positioning the market for a strong year-end.
Spreads Tighten as Lender Competition Heats Up
A central theme of the conference was the compression of spreads across fixed and floating rate products. Spreads recently reached the lowest levels of the year, and lenders are showing a stronger appetite for new transactions. Bridge lenders are especially competitive, with fixed rate bridge spreads moving below 300 basis points and floating rate loans dropping into the low 200s for the lowest risk, value-add opportunities.

Lenders are also demonstrating a willingness to pursue larger transactions in order to meet production goals before year end. This drive to place capital is creating more favorable conditions for borrowers, who now have access to a broader range of financing options with increasingly attractive terms. As a result, some deals that stalled over the last 24 months are finding renewed life, and borrowers are better positioned to structure financing for acquisition and refinancing strategies.
Life Companies Remain a Cornerstone Across CRE Capital Markets
Life companies continue to provide stability in the market. While market participants have speculated that life company allocations could be prematurely exhausted this year, many appear to have meaningful capacity to participate in closings through the end of the year. Life lenders remain focused on high-quality assets in strong markets, and sponsors seeking financing for institutional-grade assets are finding that life companies remain interested in extending credit. Among the life companies that are at or near their 2025 allocations, many expect to start 2026 originations activity as soon as mid-October.

In recent months, several life companies have introduced construction lending programs targeted at top-tier markets and sponsors with experience delivering development projects to market within budget. We have observed that life company construction lending works best for transactions starting in the $20 million range. The willingness to diversify lending programs was cited by multiple conference participants as a sign of confidence in market fundamentals that bodes well for the months ahead.
C PACE Gaining Traction
Commercial Property Assessed Clean Energy, or C PACE, is a financing mechanism that allows property owners to fund energy efficiency, renewable energy, and resiliency improvements through a voluntary property tax assessment. It has traditionally been used for development and retrofit projects, but it is now evolving into a more strategic capital markets tool.

Conference discussions highlighted how lenders and borrowers are integrating C PACE into deal structures in new ways. Retroactive C PACE is drawing attention as a paydown strategy, enabling sponsors to replace a portion of senior debt with longer term, lower cost capital. This structure creates flexibility in transactions that might otherwise face tighter proceeds or more restrictive leverage tests.

Multifamily remains the primary beneficiary, with C PACE frequently used to reduce recourse exposure and improve overall deal economics. The tool is also finding applications in hospitality and office repositionings, where energy efficiency improvements can be paired with capital stack optimization. The growing acceptance of C PACE among senior lenders underscores how it continues to grow beyond a niche financing option. It is becoming a meaningful lever in structuring transactions and improving the financial feasibility of projects across property types.
Lenders Continue to Operate with Underwriting Discipline
Although spreads have compressed and lenders are competing for business, underwriting standards remain disciplined. A consistent theme seen among lenders is an emphasis on stabilized debt yield tests tied to cap rates, with lenders often targeting a 200-basis point spread above prevailing cap rates as a minimum threshold for execution.

In addition to focusing on the relationship between debt yields and cap rates, lenders continue to emphasize fundamentals. For example, lenders are willing to compete strongly for well-located properties, experienced sponsors, and business plans that are thoughtfully designed and backed by data. At the same time, projects with aggressive assumptions or weaker credit quality continue to face significant underwriting headwinds.
Final Thoughts
The Western States CREF Conference highlighted a market that is steadily regaining momentum. Lenders are competing more actively, spreads are tightening, and life companies remain an important source of capital with growing program diversity. Tools such C PACE are also becoming more widely adopted, offering new structuring options and reinforcing the flexibility now available to borrowers.

At the same time, underwriting discipline remains intact. Lenders are focused on sound fundamentals and are rewarding strong sponsorship, resilient markets, and well-conceived business plans. The combination of more accessible capital and a broader range of financing tools is creating an environment that supports activity and could set the stage for a constructive close to the year.

Talonvest Capital specializes in structuring and negotiating comprehensive capital solutions for owners of industrial, self-storage, multifamily, office, and retail assets. We create tailored capital solutions for our clients by sourcing cutting-edge lending programs and advising on capital markets trends. 

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