Portfolio lending answers the demand for commercial financing

While many media outlets and industry insiders talk about the collapse of certain segments of the financial services marketplace, lenders that remain flexible and creative in the products they offer will continue to be successful—even in a down market. A year ago, at the height of the real estate market frenzy nearly every lender was providing capital and enjoying increased profits from bundling and selling loans on the secondary market. At times it appeared the commercial mortgage backed securities (CMBS) industry would continue breaking records indefinitely. Now, it seems as though overnight, it has disappeared. However, banks able to shift rapidly from conduit lending with loans destined for the CMBS market to "on book" or portfolio lending are now in tremendous demand. Savvy borrowers are discovering these institutions in order to meet their financing needs. Traditional commercial mortgage sources, like National Cooperative Bank (NCB), are a great partner. The move to a portfolio lending program has enabled these lenders to stay highly-competitive in the current commercial real estate market by providing attractive fixed-rate loans with three, five, and seven-year terms and 30-year amortization schedules for all commercial property types. In addition, floating-rate debt is also readily available for borrowers. The ranges and needs for portfolio lending continues to vary, and are being used to address a host of financial requirements. One recent NCB borrower was Greenwich -Desbrosses Realty, a commercial condominium property located at 125-129 Watts St. in Manhattan. The board obtained a $1 million, interest-only, 18-month term loan to refinance existing debt as well as upgrade the HVAC and to perform other capital repairs in the commercial condominium space at the building. Similarly, 148 W. 24th St. Tenants Corp., also in Manhattan, obtained a $1.5 million first mortgage for a 12-story plus basement commercial cooperative. The board of this cooperative was able to arrange a seven-year, fixed-rate loan to refinance an existing mortgage, as well as a $100,000 second mortgage for future capital improvements. These types of borrowers are coming to NCB from all over the tri-state area, as evidenced by the loan arranged for County Estates in Larchmont, N.Y. The 77-unit multifamily building was able to obtain a $3.2 million term loan from the bank to refinance three existing mortgages encumbering the property. As indicated, more and more New York area borrowers are turning to traditional, yet creative financial institutions able to provide portfolio lending for their ever changing needs. As banks look ahead to the coming year, those with portfolio lending programs will undoubtedly thrive, providing a much needed source of capital. Borrowers with strong financials seeking loans should actively pursue the opportunities offered by financial institutions that have portfolio lending capabilities for the best financial options in today's challenging market. John Donahue is the vice president of national real estate/CMBS capital markets at National Cooperative Bank, New York, N.Y.