Bingham McHale LLP, in cooperation with the Indiana Chapter of NAIOP, organized and hosted the panel discussion, “Real Estate Financing in the New Economy” on Thursday, February 24th. The event focused on requirements, challenges and opportunities associated with real estate project development and financing in the wake of the post-2007 real estate downturn.
Panelists included The Honorable Jonathan Weinzapfel (Mayor of Evansville), Bill Redman (National Bank of Indianapolis), Jon Everson (HFF [formerly Holliday Fenoglio Fowler, LP]) and Michael Garvey (Lauth). This well-rounded panel called upon their broad expertise to provide an overview of current challenges facing new project financing and existing project refinancing, and discussed the criteria lenders and local governments consider when deciding whether to invest resources in proposed projects.
Mayor Weinzapfel provided valuable insights into public/private partnerships in connection with the Evansville Arena project and associated development. He discussed the role of local and state governments in encouraging development when traditional financing sources are unable to fully fund worthwhile projects, especially projects which will generate jobs, increase the property tax base, and generally enhance quality of life.
Mr. Redman discussed the requirements of traditional lenders in this new age of stricter regulatory oversight. He commented that submitting a complete loan application package meeting all lender requirements is a key to finding traditional financing in the New Economy. He also mentioned that proposed projects would likely undergo stress-testing both prior to funding and during the loan term, and that traditional lenders will be focused on the entire capital stack when considering proposed lending.
Mr. Everson also spoke about the importance of providing thorough and accurate loan applications and associated project information. He clarified HFF’s primary focus of satisfying traditional lender requirements and assisting borrowers and developers in originating, structuring and placing debt for multi-family housing and commercial properties. HFF obtains funds from a variety of sources including Freddie Mac, Fannie Mae, HUD, life insurance companies, CMBS lenders, mortgage REITs, debt funds and traditional lenders, all of which have slightly different lending criteria, requirements and expectations.
Mr. Garvey provided a very interesting developer perspective on the capital markets. He discussed the challenges Lauth has faced in connection with proposed refinancings, valuation issues, and general concerns of its traditional lenders and other investors relating to credit risk. He also expressed dismay that valuation issues have not completely stabilized and provided some certainly to the markets.
We greatly appreciate the participation of our speakers and the quality of their presentations. If you have questions about real estate financing, please contact a member of the Bingham McHale Real Estate Department.Go to blog homepage >>