"I don't want to de-emphasize or minimize the severity of the credit environment right now--it is very tough," one locally-based developer tells GlobeSt.com. "A lot of lenders are still sitting on the sidelines--that is very clear." Still, this person continues, "there is money to be had for smaller projects--$50 million seems to be the unofficial ceiling for some; other lenders are only going as much as $25 million."
For value add projects, financing is almost impossible to get, a broker tells Globet.com, agreeing with the observation that $50 million has become an unofficial ceiling for many lenders. "Anything over $100 million is at a standstill."
"I just closed a $15 million land loan for a project in Alexandria," Cassidy & Pinkard Colliers's David Webb tells GlobeSt.com. "Just bringing them to the table was an accomplishment in this market."
Still, though the news is not completely grim; top projects are still attracting capital--even from beleaguered sources. Insurance companies, for instance, still have an appetite for real estate, despite AIG's troubles HFF senior managing director Bill Asbill tells GlobeSt.com. "It takes top quality real estate and sponsors and they generally lend at lower leverage than we have had in the past, but they are still out there."
HFF recently placed $36 million through AIG Investments for 1401 K St., a 124,706-sf class A office in the East End recently acquired by Guardian Realty Investors. Proceeds from the five-year, fixed-rate financing were used to acquire the property and establish reserves for future tenant improvements, leasing commissions and capital expenditures. Bob Donhauser and Cary Abod also worked on the deal. The deal closed before the federal government made its loan, Asbill says, but that probably wouldn't have mattered anyway as the insurance company subsidiary was the actual lender.
Also, borrowers can take heart from Brian Schaefgen, CFO of Norkfolk, VA-based Harbor Group International's recent experience. Last month the company made two significant acquisitions in the local market: the World Trade Center, nine-story, 366,106-sf office building located at 101 W. Main St., and Town Point Center, a 131,259-sf, 12-story class A office tower located at 150 Boush St. "We secured our financing through Hypo Real Estate Holding AG just before their bailout was announced," he tells GlobeSt.com.
Continue Reading for Free
Register and gain access to:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
