Traditional commercial property financing will continue to be difficult in the new year, according to the new NAI Global Issues 2011 Global Market Report.
January 6, 2011 – Fredericksburg, VA – (http://www.smart-business-financing.com) – Don’t expect banks to be making their way back into traditional commercial property financing in any big way in 2011.
That’s the message taken from a recent NAI Global Issues 2011 Global Market Report. Conditions have improved modestly, according to the report, but until there is an economic recovery that produces a sustainable increase in employment, demand for commercial real estate and a reversal in the downward pressure on prices is likely to keep banks very cautious with their lending.
The small to mid-sized banker should be a bit busier in 2011, fielding requests from solid borrowers on attractively priced commercial properties. But you should expect them to continue being stingy, since underwriting approval standards are more difficult now and because of current market risks and unstable valuations.
What you can expect, the report says, is a surge in alternative commercial property financing, as real estate investment trusts (REITs), private equity firms and other and institutional investors, who have amassed a tremendous amount of capital, aggressively search for opportunities to finance deals.
“Private loans will increase to bridge the gap between commercial banks, mortgage REIT’s and institutional funds,” says Mike Lieber, 13-year finance industry veteran and creator of the business financing web site, www.smart-business-financing.com. “With interest rates so low, people are anxiously searching for ways to boost investment yields.”
The search for higher yields will also entice new investors to get into commercial real estate, according to the NAI report. The current market offers abundant opportunity to find deals that make good investment sense, particularly in the multifamily, mixed-use, fractured condos and the retail sectors.
“More demand will counter the trend that we have seen the last few years,” says Lieber, “although it remains to be seen if it is enough to reverse the decline in prices.
A large number of maturing loans originated in 2006 and 2007 will also spur demand for alternative commercial property financing in 2011. Refinancing loans made at or near the top of the market is a challenge that banks often cannot – or will not – accept but that flexible private lenders will.
This is good news for companies like Lieber’s, who have the resources meet their clients’ financing needs across the entire capital stack. Anticipating the on-coming thaw in the capital markets and the predicted deluge of refinancing opportunities, he recently increased his network of active lenders and investors, a large portion of which are alternative sources of commercial capital.
Says Lieber, “Those of us involved in alternative commercial property financing know the more tools we have, the better our clients will fare in this volatile and complex market.”
About AEGIS Financial Solutions, Inc.: Founded in 1998, Mike Lieber’s company has been on a mission to help people solve financial problems and get money when they need it most, using the fast and flexible resources of the cash flow industry.
Mike Lieber, President
AEGIS Financial Solutions, Inc.
88 E. River Bend Road
Fredericksburg, VA 22407
PH: (540) 548-2270