Construction financing returning to the market
It may be hard to believe, but lenders are now actually sending letters of intent to provide construction financing. Construction financing, perhaps the riskiest type of mortgage financing, is available in the tri-state region for rent-regulated and other multi-family buildings. It even exists for condominium projects (and yes, I did say “condominium”).
Gino Martocci, president of the New York City and Long Island region of M&T Bank, said: “We have and continue to provide construction financing for well-capitalized clients. We are in the process of providing construction financing for a brand new hotel in the Union Square neighborhood.” Another established developer who prefers to remain anonymous, who is in the process of Building A Rental Building Off Fifth Avenue on the Upper East Side, told me that 10 financial institutions have expressed interest in the development.
Large commercial banks, European banks and local lenders are interested in providing financing. Kevin Cummings, president and CEO of Investors Savings Bank, appearing on my television show, said: “We will entertain construction financing for new residential multi-family, owner-occupied and well-situated retail developments in New York and New Jersey.” Shannon Eidman, regional manager of Chicago-based Builders Bank, will provide financing in the five boroughs from $1 to $3 million for residential condominiums with full recourse. (Recourse means there is a personal guarantee by the developer.)
Trade insiders also note that a number of lenders are interested in providing financing for residential rental buildings in Long Island City as well as in Jersey City and Hoboken.
Lenders who have expressed interest in providing construction financing for established and well-capitalized borrowers include: Bank of America, Capital One, Wachovia, Investors Savings Bank and others.
There are exceptions. Also appearing on my show, the president and CEO of New York Community Bancorp, Joseph Ficalora, said: “At this time we will not entertain financing for any new construction projects.” Daniel Harris, chief lending officer of Dime Savings Bank of Williamsburgh, concurred, saying his bank is not entertaining construction financing right now.
Michael Stoler is a columnist for The Real Deal and host of real estate programs “The Stoler Report” and “Building New York” on CUNY TV and on WEGTV in East Hampton. His radio show, “The Michael Stoler Real Estate Report,” airs on 1010 WINS on Saturdays and Sundays. Stoler is a director at Madison Realty Capital as well as an adjunct professor at NYU Real Estate Institute, and a former contributing editor and columnist for the New York Sun.