Want to know the recipe that developers need to obtain financing for new retail centers, multi-family developments or office buildings?
Breck Hanson, executive vice president and head of commercial real estate for Associated Bank in Chicago, sums it up this way: Developers need character and capacity.
“There needs to be a track record of repaying banks in full or of having negotiated less than full payment on a mutually agreed-upon basis with financial institutions,” Hanson said. “The term I use is ‘character and capacity.’ Character is pretty self-explanatory. Developers have certainly had an opportunity to show their characters in the last three or four years. They’ve had the chance to show their capacity during these years, too.”
In other words, developers need to prove that they’ve paid their bills in the past and that they have the financial strength to do it again.
Such developers will find that the lending environment has opened up.
Other developers? They’ll still struggle to obtain financing for their projects.
“The market is still closed or very difficult for the inexperienced or financially challenged and wounded development company or individual,” Hanson said. “Those companies or individuals will still struggle to obtain commercial financing.”
– Dan Rafter