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8C — September 29 - October 12, 2017 — Fall Preview — M id A tlantic
Real Estate Journal
L ending By Kathy Anderson, Progress Capital Advisors
Sometimes you have to either tighten your belt or you’ll lose your pants!
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017 has shown tighten- ing of lending standards as concerns over a wary
leasing numbers throughout metro NYC, NJ and Phila- delphia. With 70,000 units
both NYC, the Gold Coast and Philly metro pricing stable with NYC metro posting a
rates show stronger signs of growth through the next year. A survey by the Federal Reserve of senior loan officers released May 7th, suggested 32.4% of banks sighted having tightened standards for CRE lending as a whole while 36.1% said they have tightened con- siderably on multifamily lend- ing particularly in urban mar- kets. Those willing to lend are more selective - financing projects with supportable projections or unique market- able amenities. While this tightening could be perceived as a negative, it’s actually the
market working as it should, preventing overdevelopment while maintaining prices from dropping drastically. While this doesn’t make it easier for you to finance your next devel- opment, there are alternatives to consider. The best bet for construc- tion/development financing through 2018 is to look be- yond banks to less traditional sources. Certain owners/de- velopers of CRE looking to reduce their own exposure are putting more and more money into financing projects. For the second year in a row, we see a shift to these private lenders in the marketplace providing senior and mezzanine financ- ing often accompanied by higher rates with a greater return on investment – known as peer to peer lending. These lenders are looking to diversify their investments by selling assets and reallo- cating capital into bridge and construction loans at yields of 6% to 10%. This creates a lender/borrower relationship wherein the lender can deter- mine their risk based on their own industry insight while being uniquely equipped to take over the project should a borrower default. Bank relationships will con- tinue to be vital while keep- ing abreast of the changing regulations and addressing tenant demands will be criti- cal in making developments more financially attractive. At Progress Capital Advisors, we pride ourselves on our ability to identify and sum- marize our client’s objectives, ultimately matching them with the appropriate type of loan/capital source to finance their commercial assets. Our network of lenders and ex- pertise in the industry can greatly improve your ability to get funding via banks with favorable terms. Over the past two years, Progress has also increased its direct lend- ing platform offering a) CRE owners an alternative to tra- ditional bank financing and b) high net worth individuals an ability to receive above mar- ket returns secured by real estate. Contact us if you have any questions about your fi- nancing needs or how you can invest in our direct lending platform. #thatsPROGRESS Kathy Anderson is presi- dent and founder of Prog- ress Capital Advisors. n
global finan- cial outlook continue to impact the US economy. In the Mid- Atlantic Re- gion, banks are scaling back on high
The best bet for construction/development financing through 2018 is to look beyond banks to less traditional sources.
in metro NYC and 10,000 units in Metro Philadelphia coming to market, there is concern rental rates may drop as concessions increase to make Class A luxury proper- ties more attractive. To date these concessions have kept
.5% increase and Philly metro posting near flat in compara- tive rental rates. Concerned they’ll “lose their pants” if CRE valuations decrease as a result of expanding inventory, banks are tightening their belts until vacancy and rental
Kathy Anderson
leverage construction loans, particularly in the multifam- ily sector, as the last three quarters have seen vacancy rates climb despite record
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