Balance sheet lenders fund more big deals

As credit dries up and big Wall Street banks lend less to real estate investors, more recent deals have been financed by balance sheet lenders, including insurance companies, savings banks and commercial banks. Many new high-profile lenders involved in Manhattan deals are foreign, including Irish and Scottish banks, and German banks like Landesbank Baden-Württemberg and Bayerische Landesbank, which provided $700 million in financing for the purchase of 1177 Sixth Avenue. While deals continue to happen, the shift to on-balance sheet lenders might result in lower leverage and higher cost of capital.