Business Real Estate Weekly by Rose Law Group
With historically low interest rates, favorable terms and an abundance of lenders, the climate for borrowers financing commercial real estate is as good as it has ever been. Permanent financing options are abundant with a smorgasbord of lenders armed and ready to loan large sums of money. There is healthy financing competition from life insurance companies, federally guaranteed Fannie Mae and Freddie Mac, CMBS (commercial mortgage backed securities) and conventional banking institutions. Two or three of those lender types have been options in recent years, but having them all in the pool at the same time has not always been the norm. “I think it is as good as it has ever been and certainly a return to aggressive financing terms given the abundance of debt capital,” says Rocco Mandala, executive v.p. at CBRE Capital Markets Inc. in Phoenix. Mandala, a 30-year veteran in the lending industry, expects to generate nearly $600 million in loans this year. One of Mandala’s top customers is Scottsdale-based apartment developer and manager MarMark-Taylor Inc. From December 2013 through October 2014, Mark-Taylor will have placed $125 million in permanent debt on its projects. “Recently, permanent lending activity has tended to be more favorable with more lenders entering the market,” says Taylor, whose company is the most active multi-family developer in the Phoenix area. “This creates additional competition and generally more favorable terms. A few years ago, it seemed like only the agencies (Freddie Mac and Fannie Mae) were in the market. “More recently, insurance companies and conduits (CMBS) have entered the game. The borrowing environment is significantly different today than it was in 2009-2011. High occupancy with good operating results in a solid market certainly helps.” With the competitive interest rates and favorable terms, some borrowers actually get excited about the loans they are able to secure. Continued
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