The Real Deal New York

  • SPONSOREDThe Answer To Tighter Commercial Real Estate Financing Lies Beyond Banks Alone

    Presented by Eastern Union

    As investment activity tapers off from its record-breaking pace of the past few years, commercial mortgage brokerage firms are searching for new opportunities. The most successful will be those that are the most nimble and creative amid a new lending environment. The pressure is on to stay ahead of a slowdown caused by anticipated interest rate hikes, a strict regulatory environment, overbuilding worries and peaking rents.

    Mortgage brokers are already looking at refinances, with 10-year loans taken out during the go-go years coming due. Five-year loans made in 2012 and 2013 are in an even better position given their outsized performance since their origination.

    Overall, losses remain low. More than 95 percent of the $9 billion in CMBS debt due in April was paid off, according to a report from Trepp. These numbers show where mortgage brokers can match need with funds.

    Another area for brokers is development and construction lending. According to Kroll Bond Rating Agency, such loans by U.S. banks are on the rise, increasing 13 percent in 2015 and 14 percent last year. Its most recent report from March forecasted that C&D lending would keep growing through the first quarter of this year.

    Banks may also alter existing products to fill new demand, such as opting for more short-term, high-interest rate bridge loans versus longer fixed-rate ones. Savvy mortgage brokers should be increasing their reach to capitalize on these new offerings.

    One approach we have taken at my firm, Eastern Union Funding, is to expand our banking relationships to more than 200 national banks through our Quotes and Term Sheets (QTS) division. Many of these banks may be ignored by other firms because of their smaller lending capacity, but they can meet diverse needs.

    Eastern Union’s QTS division gathers quotes from lenders in real time, and provides them to clients and brokers using our free Eastern Union app. This frees our mortgage brokers to concentrate on client service and closing deals, and eliminates the chance that some lenders may be overlooked because of broker preferences. And when there is additional need for equity, our equity teams can help complete the capital stack.

    Casting a wide net is just one part of our strategy. Technology is just as important. We aren’t just matchmaking between investors and lenders the old-fashioned way. We continue to invest heavily in unique technology to augment our capability to help our clients, and build stronger relationships.

    The Eastern Union app is just one example. It is a streamlined source of information for our clients, prospects and peers in the industry, providing a rate sheet with up-to-the-minute pricing information, sophisticated calculators, a news feed, and a directory of commercial real estate executives and lenders, and more.

    This CRE tech approach requires a significant investment and with partners—like Reonomy, the data and analytics provider—we’ve expanded our capabilities. And it is positively transforming our business. Despite the slowdown on the investment side, our pipeline has only grown. Originations and conversions have increased significantly and Eastern is on track to having its best year.

    No doubt that the sales activity of past years has slowed, changing where deals are coming from. But the brokerage industry must evolve with the times and can leverage technology and up-to-the-second pricing information to continue to match investors with the best lenders.

    To date, through such an investment, we’ve been fortunate to have many opportunities to do just that.

    Ira Zlotowitz is president and CEO of Eastern Union Funding co-headquartered in New York and Howell, N.J.

    About Eastern Union Funding: Founded in 2001, Eastern Union Funding is one of the nation’s strongest and most active commercial mortgage brokerage firms and was named by Crain’s New York Business in 2014 and 2015 as one of the top 50 fastest growing companies in NYC. Its award-winning team closes over $3 billion in deals annually, specializing in sophisticated debt and equity solutions for small and mid-sized loans across all property types. Celebrating its 15th year in business, the firm launched its groundbreaking Eastern Union commercial real estate app that serves as a digital toolbox for investors to identify and close deals quickly. It is available in the Apple App Store and via Google Play for Android. Eastern Union is co-headquartered in New York and Howell, New Jersey, with offices in Maryland and Israel. For more information, visit www.easternuf.com.