Private funds seeking $32B in commercial-property debt

Miami /
Sep.September 19, 2016 02:15 PM

From the New York website: U.S. investment firms, some of which are referred to as shadow banks, are seeking $32 billion in commercial-property debt as traditional lenders shy away from providing financing directly to property owners.

Private funds are seeking nearly 40 percent more capital than last year, according to Preqin. Meanwhile, banks are increasingly less eager to provide funding to property owners as the prospect of a real estate bubble looms large, Bloomberg reported.

“These guys aren’t scared of an empty building,” said Steven Delaney, an analyst with JMP Securities, told Bloomberg “These are the loans banks don’t want. There is a tremendous opportunity and a need for commercial-property owners for more types of financing than the commercial banking industry as a whole is willing to provide.”

RXR Realty, Starwood Property Trust and the Blackstone Group, for instance, have been very active in this space. RXR agreed to provide Extell Development with a $463 million mezzanine loan for One Manhattan Square. That loan was recently downsized by $163 million.

Starwood, a mortgage real estate investment trust, can write big loans that banks under the eye of the federal government can’t match. It was one of the first lenders to provide a large construction mezzanine loan to Related Companies and Oxford Property Group for Hudson Yards, lending $475 million in equity in 2013. At the time, such a move was unheard of, sources told TRD.

“A borrower finds it much easier to transact with a single lender versus having to negotiate with multiple banks,” Starwood CEO Andrew Sossen told Bloomberg.

Banks are still active, in that they are providing financing to investment firms, which is less risky than extending credit directly to property owners since they are the first to absorb loss.  [Bloomberg] — Kathryn Brenzel 


Related Articles

arrow_forward_ios
David Grutman and Pharrell’s Goodtime Hotel had received nearly 30 noise violations (Carma Connected, Getty)
Too much of a good time? David Grutman and Pharrell’s Goodtime Hotel could lose entertainment permit
Too much of a good time? David Grutman and Pharrell’s Goodtime Hotel could lose entertainment permit
Related Companies Chairman Stephen Ross with One Flagler (Related, Getty)
Prayers answered? Related Companies closes on church site for planned office tower in downtown West Palm
Prayers answered? Related Companies closes on church site for planned office tower in downtown West Palm
Grover Corlew principal Mark Corlew with Bank of America Tower in Boca Raton (Grover Corlew)
Grover Corlew buys Bank of America Tower in Boca Raton for $45M
Grover Corlew buys Bank of America Tower in Boca Raton for $45M
Landlords keep raising office space rents despite a grim outlook for vacancy rates (Getty)
Miami office vacancy rates reach Great Recession levels
Miami office vacancy rates reach Great Recession levels
The partially collapsed 12-story Champlain Towers South condo building (Getty)
Inside the tug-of-war over the Surfside condo site’s future
Inside the tug-of-war over the Surfside condo site’s future
Moishe Mana and the downtown parking lot he purchased (Google Maps, Getty)
Moishe Mana expands downtown Miami assemblage with $12M purchase
Moishe Mana expands downtown Miami assemblage with $12M purchase
(Photos courtesy of Miami Historic Preservation, Smith Aerials, Colliers)
Development site near MiamiCentral hits the market
Development site near MiamiCentral hits the market
Alliance Residential Company CEO Bruce Ward and 6595 Morikami Park Road (Google Maps)
Alliance Residential buys site, scores $46M construction loan for senior apartments in Delray Beach
Alliance Residential buys site, scores $46M construction loan for senior apartments in Delray Beach
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...