Saturday, June 18, 2011

Indications Banks Starting to Increase Real Estate Loans

There's $1.6 trillion sitting in excess reserves at the Federal Reserve. It won't matter if there is no QE3 if this money starts flowing into the system. There are indications it is starting.  Bridgeport Investments recently financed four Southern California deals worth $40 million. Lasner and Collins, of the Orange County Register, asked Bridgeport founder Randy Bramel to provide an update on the southern California climate for corporate real estate financing:

Construction financing has just begun to become available for homebuilding and commercial/industrial properties in Southern California. Construction financing for homebuilding is being provided for larger, very well-capitalized homebuilders by the major banks, often in the form of a dedicated line of credit. For small- or medium-size builders, construction loans for specific projects are beginning to be done by banks — provided the builder has substantial homebuilding experience, good net worth and liquidity, no legacy projects carrying over from the boom days, and the number of homes being built on a speculative basis are small. The market focus for most of these lenders is infill or close-in locations. Construction financing for commercial/industrial properties has generally only been available on a build-to-suit basis up to this time. We are beginning to see some lenders offer construction financing for un-leased properties in strong markets and where the developer has strong experience in the product type being built, net worth, and liquidity. As we progress into 2011, the amount of permanent financing for quality commercial/industrial properties is growing to the point of being adequate. Properties with cash flow are generally able to attract debt: vacant buildings, for sale or lease, have very limited debt options today.

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