Commercial lending is continuing at a conservative pace amid concerns about the ongoing housing crisis, panel members said at yesterday’s National Realty Club luncheon, discussing current mortgage financing and joint venture opportunities. Melissa Farrell, managing director at Prudential Mortgage Capital Company, which last year originated $7.7 billion in mortgages, said her company is “actually looking to do more lending,” not less, but at the same time, it’s become more conservative in waiting around for just the right transactions. Stable cash flows and minimal income interruptions can boost a potential borrower’s chances, she said, though those looking to acquire strip malls or hotels may be out of luck. George Klett, chair of the commercial real estate committee at Signature Bank, agreed. As far as strip malls go, he said, Signature wouldn’t finance them. “I don’t know anyone who is doing that right now,” he said. Signature is doing office and other retail transactions on a conservative basis, as well. “We are concerned about the economy, and also about unemployment,” Klett said. Despite the tenuous state of commercial lending, however, the group also expressed optimism about the future. On the foreign investments front, Simon Ziff, president of Ackman-Ziff Real Estate Group, argued that the weak dollar is bringing foreign investors in, not discouraging them, and said he’ll be watching that market very closely in the coming months. And overall, said Dave Karson, managing director at Cushman & Wakefield Sonnenblick Goldman, “I think and hope we are close to the bottom in capital markets velocity.” TRD

Ackman-Ziff’s Russell Schildkraut (left) and CBRE’s Enoch Lawrence

Despite the recent extension of the deadlines for the federal Term Asset-Backed Securities Loan Facility, or TALF, real estate finance experts are divided on whether the program will have any direct impact on New York City commercial real estate even after the program is expected to be up and running next month. Since the Federal Reserve created the TALF program, it has not been used to finance any new commercial mortgage-backed securities pools yet, and experts said that was in part because the credit markets have improved in recent months.  More

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 Left to right: Robert Knakal, Patrick Hanlon, Barry Hersh

Brokerage and financial advisory firms are studying the recently
released federal Public-Private Investment Plan to see how they can
profit from the complex program. The two-part plan provides loan
guarantees for the purchase of troubled loans under the Legacy Loan
Program and securities under the Legacy Securities Program, including
those written on commercial real estate. The Legacy Securities Program
would tap into funds created through the Term Asset-Backed Securities
Loan Facility, known as TALF. The government hopes that credit will
free up as bad debt is removed from bank balance sheets. Experts say
that because the plan is still under development it is difficult to provide
specific examples to New York City, but The Real Deal spoke to three real estate pros to get their take on the local commercial real estate implications. [This is the first in a two-part series on how the federal loan guarantee plan affects New York City real estate. The second part will be on the residential market.] [more]