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\n Bisnow\/Maddy McCarty\n <\/p>\n
\n IBC Bank\u2019s Jeff Samples, Levcor\u2019s Justin Levine, JLL Capital Markets\u2019 Michael Johnson and Lee & Associates\u2019 Toby Kettle.\n <\/p>\n
\u201cWe’re at this great moment in time,\u201d Johnson said. \u201cThere’s really $4 or $5 chasing every dollar available in the marketplace.\u201d<\/p>\n
This has forced lenders to get granular and creative to secure deals while also ensuring\u00a0they still pencil, event panelists said. Debt sources are requiring significant preleasing and equity to fund a project, but they\u2019re willing to modify loans and adjust terms for established clients.<\/p>\n
JLL Capital Markets<\/a> has seen a 55% increase in year-to-date activity compared to the year prior, Johnson said, adding that debt sources are very balanced with no one source making up more than 30% of capital.\u00a0<\/p>\n Banks have made up 28% of JLL’s funding, he said. Banks funded about 38%<\/a> of commercial real estate deals<\/a> nationally this year after spending\u00a0the past year\u00a0cleaning their books of underperforming debt<\/a>.\u00a0<\/p>\n Since deals can be compelling for banks, insurance companies, private credit and CMBS<\/a> to all chase, lenders are finding ways to differentiate themselves, Johnson said. That can be done economically, like through spread compression, or structurally, like allowing for interest-only payments.\u00a0<\/p>\n But lenders are still strictly managing risk.<\/p>\n IBC Bank<\/a> Houston has seen its dollar volume increase this year, though the number of transactions is down, CEO Jeff Samples<\/a> said. That means it is underwriting large deals, like a $255M construction loan<\/a>\u00a0for the St. Regis-branded condominium project near Memorial Park<\/a>.\u00a0<\/p>\n \u201cWhat we’re requiring there are significant presales, if it’s a sale, or preleasing, if it’s any type of retail,\u201d Samples said.<\/p>\n Development firm Levcor<\/a> is helping to mitigate risk by using more conservative leverage, President Justin Levine<\/a> said. Loan-to-cost ratios were historically in the 70% to 75% range, but they\u2019re now in the 65% to 70% range, he said.<\/p>\n \u201cThat’s just a function of math \u2026 and what the banks require,\u201d Levine said. \u201cWe’re also being more concerned with our pro formas, and in communicating it to investors, making sure to underpromise and overdeliver.\u201d\u00a0<\/p>\n \n Bisnow\/Maddy McCarty\n <\/p>\n \n Winstead\u2019s George Craft, Cadence Bank\u2019s Katherine Griffon, Lone Star PACE\u2019s Glenn Silva and Lincoln Property Co.\u2019s Gabe Lerner.\n <\/p>\n It may now be harder to secure the equity needed to fund a project, but it\u2019s possible, said Toby Kettle<\/a> of Lee & Associates-Houston. It used to take one or two phone calls to secure equity from a life insurance company or the like, but now he finds himself looking under many more rocks.<\/p>\n Many family offices or high net worth individuals have been on the sidelines for years, Kettle said.<\/p>\n \u201cWe’re starting to make those calls saying, \u2018Hey look, we’ve got a great project here. We’ve got a great developer. Everything’s working out. We need $5M, $7M, whatever it is,\u2019\u201d he said.\u00a0<\/p>\n This can help complete the capital stack<\/a>, making it worth the extra work.<\/p>\n \u201cAt the end of the day, we’re trying to make the returns for the investor, for the developer, and as long as it pencils out, we\u2019ll make it happen,\u201d Kettle said.<\/p>\n With tariffs<\/a>, interest rates<\/a> and other economic factors rapidly changing, Samples finds himself taking a loan back in for modification almost every month. This can happen six months after a deal is signed because numbers have changed, or maybe\u00a0a developer\u00a0needs more time to get a project stabilized,\u00a0he said.<\/p>\n \u201cIf they feel like they\u2019re ahead of the curve down the road, and they can rob Peter to pay Paul and certain bills, we will entertain that,\u201d he said. \u201cIf it makes sense, we\u2019ll try to work with our clients.\u201d\u00a0<\/p>\n That isn\u2019t something he advertises, but it is an option for established clients with a good track record, Samples said.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"A lack of deal flow and\u00a0a need to mitigate risk are forcing lenders to offer attractive terms while…\n","protected":false},"author":3,"featured_media":404869,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5130],"tags":[2174,4345,191181,191184,40809,191180,191183,97163,358,191182,3187],"class_list":{"0":"post-404868","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-houston","8":"tag-capital-markets","9":"tag-houston","10":"tag-ibc-bank","11":"tag-jeff-samples","12":"tag-jll","13":"tag-lee-associates","14":"tag-levcor","15":"tag-michael-johnson","16":"tag-texas","17":"tag-toby-kettle","18":"tag-tx"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/115613427705385985","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/404868","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=404868"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/404868\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/404869"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=404868"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=404868"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=404868"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}<\/p>\n