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10A — April 24 - May 14, 2015 — Spring Preview — M id A tlantic
Real Estate Journal
By David Orbach, Regal Bank The trends and future of Multi-Family lending M ulti -F amily L ending
lending? There are s i gni f i cant strategic de- cisions being made in the banking in- dustry now, and special- ization is one W
may not experience. What are the trends you are seeing in multi-family
High demand from investors, coupled with these low inter- est rates, continues to push
Jersey remains strong, largely due to its proximity to the New York metropolitan area with dense population demograph- ics and high occupancy rates. Historically, smaller banks get into trouble when they get involved with things they think they understand, but really don’t. Many of our board mem- bers and senior management have experience in the multi- family lending arena which is why we have always focused on the multifamily sector since inception. Our in-depth under- standing of this sector gives us a comfort level other banks
in a position to negotiate other aspects of the loan. At Regal Bank, we continue to win business due to competitive rates combined with attentive, personalized service. We are seeing a trend in customers who are looking for longer loan terms, inquiring about seven- year loans as opposed to the traditional five-year terms. We have entertained such terms on a case by case basis where the underlying property and management team is strong. How is Regal Bank pre- paring for potential rate increases? This is certain to be a year of transition. Since 2008, inter- est rates have been artificially held to historic lows in an ef- fort to spur economic growth. Now that the economy has started to recover, the Federal Reserve has indicated that a rise in short-term interest rates will likely occur this year. Due to global economic events, the exact timing of that increase is still unknown, especially since a lot of people have been expecting a slight rate increase at various times the past few years which, as we know, did not materialize. The good news is that when rates do increase, it is not likely to be a big spike. At Regal Bank, we are not overly- concerned about the effects of a likely rate increase. We know our market and have a very conservative underwrit- ing process. By being cautious and sticking to proven policies and fundamentals in every lending decision we make, we are well poised to weather any changes while continuing to deliver value to our customers and stakeholders alike. How should borrowers prepare for potential rate increases? For the past several years, low interest rates and high occupancy levels have pro- vided multi-family borrowers in North Jersey a safety net. Those with current adjustable rate loans or those who are considering new fixed loans at low cap rates will need to prepare for an eventual in- crease in rates and build that into their deal evaluation. To continue to rely on such his- torically low interest rates in purchase or refinance models would be a mistake. David Orbach is Execu- tive Chairman of the Board at Regal Bank. n
hy has Regal Bank chosen to special- ize inmulti-family
“At Regal Bank, we continue to win business due to competitive rates combined with attentive, personalized service.”
down capitalization (cap) rates in the commercial real estate market. This means it is a very good time to be a borrower. Not only are multi-family inves- tors able to get their usual bank to match another bank’s lower rate, but they are also
lending? Interest rates are still very low, which means banks are competing fiercely to attract customers. As this “rivalry” continues to grow, borrowers and brokers have the upper hand when it comes to access- ing the best mortgage rates.
David Orbach
of them. Putting a sharper focus on a select set of core business has been a sound deci- sion for Regal Bank. The multi- family sector in northern New
Commercial Lending Dream Team
Brian McGuinness Senior Vice President and Chief Lending Officer
Sean Howland Vice President and Loan Officer
Monte Ehrenkranz Vice President of Business Development
Visit our booth #601 at the NJ Apartment Association Show May 19 - May 21 • Atlantic City Convention Center
Specializing in Multi-Family Lending In today’s competitive commercial real estate market, success depends on having the right bank, and the right banker, on your side. For the practical guidance, fast answers, flexible solutions and honest advice you deserve, put your trust in Regal Bank.
Livingston, Roseland, Florham Park, Millburn & West Orange (973) 716-0600 • regalbanknj.com
Equal Housing Lender. Equal Opportunity Lender.
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