Commercial lenders clamp up in South Florida

From the March issue: Commercial lenders are banking on the repeal of Dodd-Frank to improve the increasingly tight lending atmosphere in South Florida. While the pace of requests hasn’t slowed down, most lenders The Real Deal spoke to said they are not financing ground-up development at this stage in the real estate
cycle. And they are much more selective these days about which ongoing projects they do give loans to.

A prime example is Privé at Island Estates, a luxury condo project under construction in Aventura. The project has been embroiled in litigation with neighboring homeowners, one of the factors making it difficult for the developers, Gary Cohen and BH3, to secure financing. In late 2015, Maxim Capital, which specializes in short-term lending, provided $25 million for the project. The developers had been seeking an additional $147 million but eventually settled on a $102 million construction loan post-top-off from Maxim and Prophet Capital Asset Management, a Texas-based nontraditional lender.

“There is plenty of liquidity in the market for most projects, though borrowers may find it slightly more expensive and will need to bring a little more equity than in the last couple years,” said Steven Fischler, founder and principal of New Gables Capital. He said that if the presales are there, banks don’t have an issue with extending loans —with caveats. “We’re mostly extending renovation/bridge loans where the end result is a cash-flowing property,” Fischler said. [more]