Michael Stoler — Is there money for real estate?

<i>Despite economy, lenders are out there for commercial investors</i>

As we enter the new decade, one of the biggest questions for real estate owners and investors is whether there is “mortgage money” available for commercial real estate. I am happy to report that in my recent meetings and discussions, real estate lenders concur that there’s plenty of money to finance all kinds of projects — though under new terms and conditions.

Vincent Palagiano, the chairman and CEO of the Dime Savings Bank of Williamsburg, an active lender to owners and purchasers of rent-regulated apartment buildings in New York City, said: “We are open for business, yet the demand is not there. We want to lend, yet very few investors are knocking on our doors.” The most active lenders for apartment buildings are banks, including New York Community, Capital One, Dime of Williamsburg, M & T, Signature, Amalgamated, Flushing, Astoria and Apple. Most of the local savings and commercial banks are offering funds for terms of five, seven and 10 years, in a range from $1 million to $25 million.

Pricing is as low as 5 percent, with the majority of the financing from 5.25 to 5.75 percent. A number of other lenders continue to offer financing for multifamily buildings at higher rates, in the 6 percent range, including Country Bank, Bank Leumi, Sterling National and Herald National.

One of the newest players entering the arena for financing in the metropolitan region is Investors Savings Bank. This Short Hills, N.J., bank is bullish on providing financing for multifamily residential. The bank recently opened an office in One Grand Central Place, located at 60 East 42nd Street. Domenick Cama, a senior executive vice president at Investors, said: “We are interested in this asset class and can provide loans on a portfolio of residential properties up to $40 million.” Other lenders pursuing lending opportunities in the region include Oritani Bank and Spencer Savings of New Jersey, and People’s Bank of Connecticut.

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Appearing on a recent broadcast of my television show, senior lenders, who included Cama, Palagiano, John Adams of New York Community Bank and Rick Lyon of Capital One Bank, noted that their banks are interested in lending to seasoned and established borrowers. “We have always been active in multifamily lending, and will lend to established operators who will maintain their banking relationships and accounts with our bank,” said Lyon, head of real estate lending at Capital One Bank. Cama added: “We are requiring the operating and rent security accounts for the properties that we finance for a borrower. If they want a loan from our bank, it must be a total relationship.”

Retail is another area of interest for lenders. “New York City is under-retailed, and we will consider lending for local retail,” said Gino Martocci, senior vice president and head of lending for New York City and Long Island at M & T Bank. “We love lending on Madison Avenue. Urban retail is a preferred asset class for our bank, and we will provide lending in all of the boroughs,” he added. Other lenders working in this asset class include Capital One, New York Community Bank, Dime of Williamsburg, Investors, Signature, Herald National and Country Bank.

Meanwhile, few lenders are interested in providing financing for new construction and the hospitality industry. M & T Bank, an exception, noted that it plans to continue lending in this market. “We have over $700 million in loans to the hospitality industry in New York City, and would consider new loans for hotels, including construction,” added Martocci.

Foreign lenders and the large commercial and savings banks also continue to have an appetite for well-located, leased-up office buildings in Manhattan — despite the shrinking demand for office space. If a property is owned by an established, well-capitalized borrower, financing is available: Just look at the recent financing of office towers at 515 Madison Avenue, 1385 Broadway, 1515 Broadway and 4 New York Plaza. Leading the pack in providing financing are the Bank of China, Westdeutsche ImmobilienBank, Natixis Real Estate, Wells Fargo, Capital One, DekaBank, Helaba, DG Hyp, M & T Bank, PB Capital and Nord/LB.

With close to $1.2 trillion in commercial debt due to mature by 2013, owners and developers across the country will find themselves under stress when their loans mature. Despite that, I am happy to see capital returning to the mortgage market. The combination of mortgage financing as well as equity available from domestic and global investors may provide the needed momentum to capitalize the real estate market.