Where do CRE developers and investors go when Banks are not lending?
Link to Article: Non-Bank Lenders Step Into the Limelight Once Again Where do CRE developers and investors go when Banks are not lending? If you do not have time to read the entire article, please allow me to extract and apply the relevant.
"The steady roar of inflation combined with multiple Federal Reserve interest rate hikes in just 11 short months stymied real estate development projects and create a capital markets environment that made both loans and liquidity increasingly hard to come by."
For refinances and viable construction loans, there are other executable options.
"In fact, the most desired landing pad for investment capital now and into the future might be with an alternative lender."
So who and what is a CRE alternative lender? They include private equity firms, hedge funds, specialty finance companies, and online lending platforms. In short, it is a non-bank institution for borrowers who cannot obtain financing from traditional banks or other traditional lending sources. Alternative Lenders often use their own capital or funds from investors to finance CRE properties and typically have more flexible underwriting standards and faster turnaround times than traditional lenders. They provide a range of loan products, including bridge loans, mezzanine financing, and preferred equity investments, and may be willing to take on more risk than traditional lenders in exchange for higher returns.
"The fallout from this most recent regional banking crisis could spawn the creation of even more alternative lenders in the years ahead, according to some experts."
This is good news, we always need more lenders.
Contributed by: Kyle Nagy
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