There’s no one road to financing commercial real estate projects  

ULI
Gary Linhart, John Graham, Trey Morsbach and Douglas Wilson discuss financing commercial real estate projects. Credit: Philip Haldiman

By Philip Haldiman, Editor-in-Chief | Dealmaker

When it comes to financing real estate projects, each one has its own path.

This was one of the themes at Urban Land Institute’s event, Capital Markets: Development Financing Perspectives and Challenges in a New Era, yesterday afternoon at the Omni Montelucia Resort in Paradise Valley.

Trey Morsbach, senior managing director of HFF, said that while last year was about recovery, this year is about fundamentals.

Morsbach has completed more than $16 billion in commercial real estate transactions with his national firm, its largest office in Dallas.

He said interest rates don’t correlate with transaction activity, instead job growth correlates with property prices.

There was $424 billion in commercial transactions last year and there is robust transaction activity right now, he said.

“That is nearly identical to 2007,” Morsbach said. “The primary market is at near perfect pricing and the secondary markets will soon outpace the primary markets.”

John Graham, president of Sunbelt Holdings, said having an attractive site never hurts when it comes to securing financing.

His company has developed Marina Heights, the mixed-use project at Tempe Town Lake set to house State Farm.

Projects don’t happen overnight, so maintaining relationships with lenders is important, he said.

“You want your lender to be comfortable with your game plan,” Graham said.

One topic of discussion was the mixed-use project being developed around the former Monti’s La Casa Vieja in Tempe.

Douglas Wilson, chairman and CEO of DWC, said he expects to release more information about the $190 million project as the permitting process with the city comes to an end in about a month, with construction set for November.

But he said, the project almost didn’t get financed.

“Last fall were running out of time with the seller,” Wilson said. “We were pregnant to the tune of $25 million, but we had enough belief in the project to stay the course,” Wilson said.

 

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