tenant improvements and renovation,
but it is a little bit of an uphill battle to
get the major financial players to jump
in. Things are evolving,” Hurtuk says.
Elsewhere in America, there is plenty
of debt available for good deals, but
financing has gotten so competitive
that lenders need to get much
“Capital is very easy to find; it’s the
deals that are hard to find,” avers
Mike Garrido, SIOR, president
of Trident Ventures LLC in Milton,
Mass. He has been employing
“forward deals” especially when
working with private equity to get
“Private equity has to be more creative
to get the returns needed, that’s
why they are going further forward
on deals,” Garrido notes. “Some
insurance companies are even getting
into funding the forward take-out of an
Garrido just completed a $42 million
financing for a GE Aviation project,
a 300,000-square-foot facility in
Lafayette, Ind. The property will
be used to build jet engines for a
new class of single-aisle planes,
in cooperation with Brazil’s
“This was a forward contract; the
facility won’t be ready until 2016, but
GE Aviation needed to find a developer,
a capital source and pre-fund the deal,”
says Garrido. A private equity fund
provided a forward take-out.
Garrido adds, “I worked on a number
of these deals over the past couple of
years, as lenders are trying to get more
creative, to lock up deals because good
ones are hard to find.”
Even with all that, two of the busiest
debt sectors have been CMBS and
insurers. Originations for CMBS
are expected to surpass $100 billion
this year, which would be the first
time since 2007. Last year, CMBS
originations totaled $86.1 billion.
As for life companies, they are also
“Besides CMBS coming back very
strongly and doing good volume, the
life companies are putting a lot of
money out,” notes Gabriel Silverstein,
SIOR, president of Angelic Real
Estate, New York City. “Last year
was a record year for life companies
on mortgages. This year will break
To which Silverstein adds, “the
emergence of debt funds, a non-regulated, institutional type lender,
for particularly the bridge loan space,
has been one of the best developments
in the debt world over the last
About 30 percent of the placements
Silverstein has done in the past three
years have been with low-interest-rate,
debt-fund lenders, which are usually
backed by pension funds, insurance
companies, or other institutional
lenders that have pooled capital.
This is relatively short-term lending,
generally two to five years, so the
cost is a bit more than a bank loan.
Debt fund capital, depending on the
project, can be had in the 5 percent to 6
Silverstein doesn’t eschew the banks.
Recently, his company did two non-recourse deals in Texas with local
banks. On smaller deals, he says,
the local banks are better when the
backstory of the deal requires an
understanding of the neighborhood.
“There is debt available for anything
you want,” Silverstein reiterates.
“You still need to look for it. A lot
of old relationships don’t exist and
those groups with whom you had a
relationship may not be able to do
the same kind of deals. Also, there
is a whole new category of lenders
out there. The lending world is an
EIGHT TIPS FOR
1It is important to have a strong sponsor. A good track record is
2The property needs to be in a good location.
3You still have to put cash into the deal; 75 percent LTV
remains the norm.
4Try to get financing arranged prior to submitting an offer.
5Do your homework. The lender wants to know everything,
from the local real estate market to
the competitiveness of a tenant’s
6Take time to meet with the lender. Sometimes the lender’s
slate is full so they don’t need to
make a competitive loan before the
end of the year. Why waste
7Maintain relationships with lenders. If a lender comes to you
asking for collaboration in regard
to appraisal or valuation, even if
the project isn’t yours, be helpful.
8Players in a deal may rely on you for local knowledge, from
building inspectors to specific
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