From the Southern California Market Report: Developers plotting to build in the hot Los Angeles market are bracing for tighter lending conditions, even for projects backed by robust supply-demand fundamentals.
Banks, the traditional source of construction financing, are in retreat due to a more conservative lending approach and new pressure from regulators. Developers who do secure bank loans have been required to put up more equity, accept higher borrowing rates and provide stronger guarantors, industry insiders tell The Real Deal. Builders have also found nonrecourse loans from banks to be elusive in this more cautious environment.
“Construction lending is much more difficult than it was last year,” said Chris Casey, an L.A.-based managing director in JLL’s real estate investment banking group. [more]