Multifamily, Small Deals Get the Money

ELMWOOD PARK, NJ-Multifamily properties and smaller deals under $10 million are the easiest to finance in today’s debt-deprived marketplace. It also helps if the borrower is considered creditworthy. Those were some of the trends that came to light from a recent survey of GlobeSt.com readers sponsored by Real Estate New Jersey . Thirty real estate professionals took the poll, which posed a series of questions on the present climate for lending.

When asked to describe the current financing market, 69% said that money is available, but for only smaller deals with the best sponsors. A majority of the respondents–55.6%–reported that deals under $10 million are getting done, while one-third related that transactions between $10 million and $20 million can still get dollars. “Anything under $20 million should have a home, but at higher rates and lower leverage,” stated one Northeast-based owner.

When asked who were the most active lenders today, 73.3% responded regional and local banks, followed by insurance companies (13.3%) and hard money lenders (6.7%). “Money is available from regional banks with recourse and loan to values from 50% to 60%,” said a director of leasing and acquisitions at an owner/developer. “Spreads are still very high.”

Said a chairman of an owner/developer: “Banks are active, but are returning to old-fashioned ‘relationship’ lending.”Michael Strauss, senior director at Marcus & Millichap Capital Corp. in Elmwood Park, confirms those assertions. He tells GlobeSt.com that a number of the large national banks that once dominated the marketplace have either pulled back completely or are much more conservative in their lending terms. However, “they are being replaced more and more by local community banks,” Strauss says.

Kennedy Funding Inc., a private lender based in Hackensack, has seen its business surge due to the absence of traditional banks in the marketplace. In the past year, it has financed nearly $200 million in loans.