Stocking stuffers for 2015:There are many healthy and robust financing options available

Going into the year-end, many of my clients ask what my predictions are for the near and mid-term future of the real estate financing market. While my crystal ball is still being polished, I figure the best response is simply to provide live information on deals we are executing as an indication of the strength of the market, across various asset classes including multifamily, office, retail, hotel and land transactions. Multifamily We are currently offering fixed rates as low as 2.5% to 3.25% and up to 75% loan-to-value for terms of three to seven years. In some cases when the leverage is below 65%, interest-only can be structured as well. Additionally, we have completed several transactions at 80% loan-to-value on a 10-year fixed-rate loan at approximately 4.5%, with five years of interest-only payments and a 30-year amortization thereafter. Office Currently we are in the midst of a large Manhattan office financing being completed at 75% loan-to-value on a 10-year interest-only basis at a coupon of 4.75%. The property is a B+ asset in an A location with strong sponsorship. Separately, we recently financed a transitional office property that was only 40% occupied at 85% loan-to-cost. By explaining to the lending community the basis of the borrower in the property relative to competing buildings in the area, there was a clear value proposition to justify the leverage. Since closing the borrower has been successful in attracting several tenants to bring the property close to full occupancy. This was financed with a floating-rate loan priced in the low-6% range, with favorable flexibility in terms of prepayment and exit. Additionally, we are financing the acquisition of an office condominium that will be delivered vacant with 65% financing at a rate below 4%. Retail While most retail in the New York City area is readily financeable given the inherently excellent sales volumes and demographics in our region, particularly with urban retail, there are some more complicated situations that we have successfully tackled for our clients. Currently, we are working separately with two institutional sponsors who own single tenant properties throughout the east coast. These are non-investment-grade tenants whose leases roll within the proposed loan term. While most lenders would typically dismiss a loan request on such an opportunity, we were successful in demonstrating the strong sales, low occupancy cost and barriers to new development to make lenders comfortable that these tenants would renew their leases. Ultimately, we obtained a seven-year loan at 1.55% over 30-day LIBOR. The lender was offering interest-only for the full term though the client preferred a more conservative structure. Hotel Hospitality has been an extremely active sector. We recently quoted a $125 million purchase with 85% loan-to-cost at 5% over 30-day LIBOR for a two-year term. Moreover, we are in the process of negotiating a $19 million loan on a hotel at 80% loan-to-value, 90% loan-to-cost on a transitional loan at 5.25% over 30-day LIBOR. These are very strong terms and our clients have been pleasantly surprised with our success in this sector and the strength with which we have executed on their behalf for assets that are outside of core markets. Land Currently we are engaged on several land transactions. Of note, we recently closed a land acquisition loan in less than three weeks that provided 80% non-recourse financing to the borrower. This was especially unique because there was uncertainty in the transaction given the in-place tenancy that had remaining term on its lease, making it unknown how soon the client could execute their business plan. This loan was competitively priced at 9.5%. Additionally we are working on a large land acquisition loan with a similar issue and are making successful headway in structuring a loan that provides high leverage relative to the purchase costs, though is in line relative to the value of the collateral. The key takeaway here is that for all asset classes, there are healthy and robust financing options that are available to complement a well-thought business plan. Please feel free to contact us as a resource on your next project as the market is always changing. Tal Bar-Or is a managing director at Meridian Capital Group, LLC, New York, N.Y.