Competition for Developer Loans Heats Up

Joe Taggart, senior vice president of the commercial real estate banking division with USAmeriBank, talked to GlobeSt.com about what buyers and developers should know.

ORLANDO—During the recession, commercial real estate lending by banks in the Tampa Bay area was close to nonexistent, with very few loans being made to buyers and developers. But fast-forward to today and the market is cranking, fueled by a variety of bank lenders. Clearwater-based USAmeriBank was an exception during the downturn, lending when most banks were on the sidelines. And that helped fuel the expansion of a bank that has grown to more than $3.6 billion in assets since being founded nine years ago. USAmeriBank continues to be extremely active, making loans for everything from convenience stores to self-storage facilities to major condo projects. But now, there is a ton of competition for loans from banks both big and small. So what does that mean for lenders and in turn, borrowers? Joe Taggart , senior vice president of the commercial real estate banking division with USAmeriBank, talked to GlobeSt.com about what buyers and developers should know about the current lending environment, along with other thoughts on the Florida market. GlobeSt.com: What is the competitive landscape like right now among lenders? Taggart: As the economy has improved, more banks have started participating in development loans again, so developers have far more choices. Non-traditional lenders have also entered the market looking to serve developers, especially those building on a more speculative basis. But those loans tend to come with higher rates and they are less regulated forms of capital. GlobeSt.com: What has changed for bank lending since the recession? Taggart: New regulations have brought more discipline and structure in banks’ lending. And I hope that discipline remains, because lax lending standards are often a contributing factor to an overheated market. There is definitely more required in the underwriting process, like stress testing, market studies and more robust third-party reports. And developers also need a healthy amount of cash to put down. GlobeSt.com: What should a buyer or developer look for when choosing a lender? Taggart: Good lenders have a network of customers they can connect developers or buyers with, such as general contractors and architects. They can also connect sellers with buyers, and should offer good service and take the time to learn a customer’s business. Most important, a good lender is an institution with stability that has the knowledge to offer valuable feedback on a deal. Speaking of commercial lending and real estate, women have come a long way. Check out my recent column with TotalBank senior vice president Marti Mang .