While banks can get very aggressive with their underwriting for stabilized apartment assets, they're typically more cautious with new construction. Since there are any number of risks that could delay or even halt development, including securing entitlements, labor or materials, they understandably require more from borrowers on ground-up development.
But in this market, where multiple players are offering debt for apartment projects, lenders have to get a little more competitive.
"Typically banks' construction lending is usually at 60%, 65% or maybe 70% [loan to value], says Steve Rosenberg, CEO of Greystone. "However, a borrower just came to us looking for 90% construction financing. They got it. It wasn't from us, but they got it. We've almost never seen that before."
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Leslie Shaver
Les Shaver has been covering commercial and residential real estate for almost 20 years. His work has appeared in Multifamily Executive, Builder, units, Arlington Magazine in addition to GlobeSt.com and Real Estate Forum.
