For example, in a recent multifamily financing arranged by GSP, the initial acquisition loan was structured with the lender to close once the property reached a pre-agreed occupancy level. However, due to a mistake in the drafting of the purchase and sale agreement, the buyer was required to close at a much lower occupancy than the lender had agreed to. This required our team to find a way to restructure the loan prior so that it could close without the expected occupancy. We had just a few days to get the financing restructured, re-approved and closed. We made it work based on our relationships and experience with the specific lender. It is unlikely that a borrower not knowing the decision makers at the capital provider would be able to accomplish the same result.

GlobeSt.com: How do you qualify a lender's offer and know that you won't be re-traded?

Tenzer: Knowing the decision makers personally, as well as having knowledge of the history of how they've conducted themselves over the course of other financings, is essential. During the course of an approval process by a lender there are undoubtedly many issues that arise that need to be addressed. Knowing in advance how a capital provider will deal with the inevitable changes is essential.

We've all heard horror stories of lenders who “retrade” a deal right before closing when the borrower has few options. A good capital advisor will know which lenders regularly retrade and which do not.

Capital advisors also bring more clout to the negotiations than a borrower would typically have on their own. Because the lenders don't want to negatively impact their relationship with capital advisor firms who bring them a number of opportunities, the likelihood of lenders re-trading or renegotiating a deal with an advisor involved becomes much lower.

GlobeSt.com: Hundreds of billions of dollars worth of 10-year loans are maturing in the next few years; Will borrowers be able to refinance without the requirement to inject fresh equity into a deal?

Tenzer: As the legacy loans mature, there is a probability that additional sources of capital will be required to complete the refinance as lenders are more conservative now than they were in 2006 and 2007. However, I don't believe that we are going to have a debt maturity default nightmare like we did ten years ago when many borrowers did not have the liquidity to supplement a shortfall in proceeds. Many new capital sources have come into the market with programs which can provide additional capital to successfully restructure the capital stack. How the capital stack is structured and selecting the right capital source takes industry experience and current market knowledge.

Unless you are involved in capital markets on a daily basis, it's difficult for a borrower to determine the right source of capital. That is according to Gary Tenzer, principal of George Smith Partners. Tenzer recently chatted with GlobeSt.com on the subject. “Even those who read case studies or hear about them at conferences or from friends are not getting the full picture of the pricing and structure of the financing.”

GlobeSt.com: How do you select the right source of capital?

Gary Tenzer: Because borrowers are striving to achieve many objectives, it is beneficial to obtain guidance from an experienced capital advisor that has long-term, pre-existing relationships with the capital markets. An individual or a team with extensive experience in the capital markets can best understand a borrower's requirements to advise them and negotiate an optimal capital structure on their behalf.

While attorneys and CPAs may have familiarity and awareness of capital structures, they typically do not have currency with market pricing and terms. Key deal points are best negotiated by a capital advisor who is current, experienced and knowledgeable about the capital markets.

For example, in a recent multifamily financing arranged by GSP, the initial acquisition loan was structured with the lender to close once the property reached a pre-agreed occupancy level. However, due to a mistake in the drafting of the purchase and sale agreement, the buyer was required to close at a much lower occupancy than the lender had agreed to. This required our team to find a way to restructure the loan prior so that it could close without the expected occupancy. We had just a few days to get the financing restructured, re-approved and closed. We made it work based on our relationships and experience with the specific lender. It is unlikely that a borrower not knowing the decision makers at the capital provider would be able to accomplish the same result.

GlobeSt.com: How do you qualify a lender's offer and know that you won't be re-traded?

Tenzer: Knowing the decision makers personally, as well as having knowledge of the history of how they've conducted themselves over the course of other financings, is essential. During the course of an approval process by a lender there are undoubtedly many issues that arise that need to be addressed. Knowing in advance how a capital provider will deal with the inevitable changes is essential.

We've all heard horror stories of lenders who “retrade” a deal right before closing when the borrower has few options. A good capital advisor will know which lenders regularly retrade and which do not.

Capital advisors also bring more clout to the negotiations than a borrower would typically have on their own. Because the lenders don't want to negatively impact their relationship with capital advisor firms who bring them a number of opportunities, the likelihood of lenders re-trading or renegotiating a deal with an advisor involved becomes much lower.

GlobeSt.com: Hundreds of billions of dollars worth of 10-year loans are maturing in the next few years; Will borrowers be able to refinance without the requirement to inject fresh equity into a deal?

Tenzer: As the legacy loans mature, there is a probability that additional sources of capital will be required to complete the refinance as lenders are more conservative now than they were in 2006 and 2007. However, I don't believe that we are going to have a debt maturity default nightmare like we did ten years ago when many borrowers did not have the liquidity to supplement a shortfall in proceeds. Many new capital sources have come into the market with programs which can provide additional capital to successfully restructure the capital stack. How the capital stack is structured and selecting the right capital source takes industry experience and current market knowledge.