Thursday, March 22, 2012
The Money Question: Looking at Lending in 2012

Brian Gould, Senior Vice President – Finance, The JBG Companies

Grace Huebscher, President and CEO, Beech Street Capital
Rick Lyon, Executive Vice President, Capital One Bank
Bryan McDonnell, Principal, Prudential Mortgage Capital Company

Brian Gould thanked Janet and introduced the panelists including Grace Huebscher, President and CEO, Beech Street Capital; Rick Lyon, Executive Vice President, Capital One Bank, Bryan McDonnell, Principal, Prudential Mortgage Capital Company.

The panel discussed CRE lending trends in 2012 and the changes in the credit environment from 2011. With over $1 Billion in construction lending in 2011, it’s no surprise the majority of it went to multi-family projects. The phenom in the construction lending industry recently has been the simple “fixed rate” financing as the rates are attractively low. In fact, the ten-year fixed rate is ideal. The ten-year allows for flexibility, pre-payment options and most often, a quick closing. In New York City, the country’s largest multi-family market, seven-twenty year terms are the norm. And that is considered “long term”.

Spec office construction is not ideal for lending unless there is a lot of equity upfront. Hence the reason we see projects on the drawing boards for years.
Rick Lyon, of Capital One, joked that typically debt originates when it’s not your “own” money. And that the attempt to consolidate CMBS markets is like “heading cats”.

There were some questions from the audience about what the outlook is for 2012 and beyond, but mostly the panel could only speculate and make reference to the upcoming elections.

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