Developer Graham Cos. wanted to have more time than the typical 10 years to repay a $120 million loan.

Property manager Cardinal Point Management LLC wanted to work with a flexible lender who can provide low interest for a $41 million loan.

And Vutec Corp. wanted a lender willing to issue $3.3 million after the electronics company filed for bankruptcy protection.

They all turned to alternative lenders rather than more heavily regulated banks.

“I think in this market, we are seeing a lot more of developers using alternative financing sources as opposed to going to the traditional banks because generally the alternative financing sources — private equity funds, for example — they don’t have to follow as many of the regulations as traditional banks do,” said Phillip Sosnow, a real estate partner at Bilzin Sumberg in Miami. “They have a little more flexibility in being able to lend.”

While national banks are the main player in South Florida commercial real estate lending, some alternative lenders are gaining ground. Life insurance companies set a record in 2017 when they issued $80 billion in commercial loans nationally, 4 percent more than in 2016, according to a Mortgage Bankers Association report.

In South Florida, borrowers are opting for alternative lenders because of the flexibility they provide, experts said. From offering more competitive interest rates and long repayment schedules to higher loan-to-value ratios, alternative lenders are less restrictive and increasingly becoming the choice for commercial borrowers.

Just ask Stuart Wyllie, head of Miami Lakes-based Graham Cos., which has developed much of the northwest Miami-Dade County town from its pioneer past as a family-owned dairy into an affluent suburb. The company closed June 21 on refinancing for a 29-property commercial portfolio, picking New York-based global insurer American International Group Inc. as the lender.

“We went with the life insurance company primarily because of the deal we were looking for. This is a 15-year deal. Your normal banks and those kinds of lenders don’t tend to go that long. Some do, but generally speaking they don’t,” Wyllie said. “These life insurance companies have long liabilities, and they look to match these mortgages up with those liabilities.”

Vutec, a video projection screen maker, needed to refinance its industrial owner-occupied building at 11711 W. Sample Road in Coral Springs about two years ago. But the was a year after its Chapter 11 bankruptcy filing, which likely reduced the pool of lenders willing to work with the company.

“A lot of banks won’t lend to companies that are either in bankruptcy or emerging from a bankruptcy,” said Brett Forman, president and CEO of commercial bridge lender Trez Forman Capital Group.

Trez Forman issued a nonrecourse loan with a 65 percent loan-to-value ratio. The 24-month financing allowed for a possible extension and had a 9 percent fixed interest rate.

“They had gone through a reorganization, and we gave them flexible terms so they can deploy more capital into their business,” Forman said. “We didn’t really look at the value of the business. We looked at the value of the real estate, and we made a loan based on the value of the real estate. Kind of a true asset-backed loan.”

Lending Overview

Despite the flexibility of alternative lenders, Federal Deposit Insurance Corp.-insured banks held 40 percent of the total $3.1 trillion outstanding debt, making them the largest single source for commercial and multifamily mortgage loans nationally in 2017, according to the Mortgage Bankers report.

But the report also showed banks had the lowest year-over-year increase at 6 percent in debt holdings in five years. At the same time, life insurance companies grew their portfolios by $40 billion, a 9 percent increase.

“The long-term nature of commercial and multifamily loans matches well with the long-term nature of many of the liabilities of these companies,” the  report said.

The Dodd-Frank Act implemented in 2010 added restrictions on banks, including their commercial real estate lending. The U.S. Senate in March and the House in May voted to relax some of the restrictions on lenders with less than $250 billion in assets.

“The search for alternatives might be a result of the stricter regulations imposed on banks following the 2008 financial crisis,” Sosnow said. “New regulations aside, banks became more cautious. The banks have learned their lesson, and they don’t want to be stuck with a bunch of failed projects. Traditional banks are being a lot more cautious in their lending. Regulations have changed. And so their requirements are definitely a little more stringent than what a private equity lender or some of these alternative sources may be required to do.”

“At the same time, an influx of alternative lenders means they are competing hard for borrowers,” said Brian Gaswirth, HFF director in Miami. “The debt markets in general are super-competitive right now just given the amount of liquidity in the marketplace, and there’s a lot of groups that are looking to put out money. In order for them to win deals, you are seeing more competitive spread. There’s a lot of supply, not as much demand. So when there is a good deal in the marketplace, you get a lot of great options. Some alternative lenders are willing to go as high as 85 percent on loan-to-value ratios and as long as 30 years on loan terms.”

The Projects

Still, brokers and borrowers said it comes down to matching a project to the right lender, bank or otherwise. Cardinal Point, a Tampa investor that paid $47.5 million in July for the 12-story Coastal Tower at 2400 E. Commercial Blvd. in Fort Lauderdale, considered both banks and alternative lenders when looking for a loan.

It picked New York Life Insurance Co. as the issuer of $41 million in financing, including $32.4 million was for acquisition and the rest for renovations of the office building, said Gaswirth, who was part of the HFF team that secured the loan. The decision to go with the third largest life insurance company in the U.S. was based on the type of financing it offered, although Gaswirth declined to disclose the terms.

“There’s also the nonmonetary benefit of being able to start a new relationship with one of the largest life insurance companies in the country,” Gaswirth said.

“The Graham Cos.’ pool of lenders includes banks and alternatives,” Wyllie said. “A lot of its $120 million loan will be used for new construction.”

This includes Graham Cos.’ nearly finished 40,000-square-foot, two-story office building southeast of Main Street and Ludlam Road in Miami Lakes’ Town Center; two nearly finished industrial buildings with a combined 76,000 square feet at Business Park West; and a planned 220-unit senior apartment community also at Business Park West.

“Every deal stands on its own,” Wyllie said. “When we decide to go on the market looking for capital, we will look at all the sources.”


Source: DBR

Michael Rauch and Thomas Robertson, co-founders of Rauch, Robertson & Co. and CRE Florida Partners, welcome Grant Rowars to its team of professional commercial real estate specialists.

Grant Rowars joins CRE Florida Partners as Vice President – Commercial Sales & Leasing, focusing on Industrial and Office properties in the Tri-County area.

As a real estate advisor, Grant works directly with the founding partners to bring over forty-five plus years of combined commercial real estate brokerage, development and management experience to his clients. His analytical background and degrees in finance and real estate bring unparalleled underwriting expertise and empowers his local market knowledge to help landlords and investors maximize their properties returns and execute strategically timed acquisitions and dispositions all while minimizing risk.

His focus at CRE Florida Partners is in the Industrial and Office sectors of the Tri-County area providing a wide range of services that include: investment sales, leasing, sale disposition, tenant and corporate representation, property underwriting, capital structure, financing, loan and asset due diligence, and IRC 1031 exchanges.

Grant is also serving as a 1st lieutenant and Executive Officer in the United State Army National Guard where he is responsible for the readiness and training of soldiers and the maintenance of +$50 Million in assets. The skill sets utilized in his military career are reflected in his dedication to the commercial real estate industry, which results in an unwavering commitment to loyalty, work ethic, and leadership.

Prior to joining CRE Florida Partners, Grant was a member of the Investment Sales and Capital Markets group of Colliers International where he worked on identifying, underwriting and brokering investment properties in the Tri-County area.

Delray Beach raised the building height limit for four parcels along Atlantic Avenue from three stories to four to settle a lawsuit filed by the owners.

The land owners, William “Billy” Himmelrich and David Hosokawa, sought at least $6.9 million in damages from the city for alleged violation of the Bert Harris Act, a state law that protects the rights of private land owners.

Delray Beach city commissioners narrowly approved the four-parcel upzoning designation in a 3-2 vote. Commissioner Bill Bathurst, who voted against the measure, told the Palm Beach Post that the  one-story increase in the building height limit for the four parcels will encourage other land owners to seek similar treatment.

Located just east of the city’s Old School Square cultural center, the upzoned property includes two parking lots and two restaurants, Cabana El Ray and Tramonti.

Himmelrich and Hosokawa had planned to build a four-story hotel before the city imposed a three-story limit on building height along East Atlantic Avenue between Swinton Avenue and the Intracoastal Waterway, an district that encompasses their four parcels.

City attorney Max Lohman said city commissioners effectively carved those four parcels out of the three-story district.

Himmelrich told the Palm Beach Post that he and Hosokawa plan to move forward with a four-story development on their Atlantic Avenue property, possibly as a non-hotel project.


Source: The Real Deal

Entrepreneurs looking to start a small business in a small city have some of the best options for locations right here in South Florida.

Weston ranks No. 2 in that category nationally, according to a new report by Verizon Business, while Delray Beach came in No. 5.

Lauderhill was No. 13 on the list, with Homestead at No. 38.

Factors considered in Verizon’s study include population, education, travel time to work, income per capita, loans per capita, broadband access and tax scores. (The report notes that to be considered a “small city” according to the U.S. census, the population must fall between 50,000 to 75,000 people.)

Only Portland, Maine, was a more attractive small city for starting a small business than Weston.

“Being No. 8 among the top 100 safest cities in the country is reassuring for a fledgling business,” Verizon’s report says of Weston. “This is also the most educated city in the top 10, with nearly 60% of the population holding at least a bachelor’s degree. So Weston has got a lot going for it, and people are taking notice. The only downside to setting up shop here is the commute to work, which runs at about half an hour, but hey — you’re not far from the beach and the Everglades are basically in the city’s backyard, so let’s call it even.”

The South Florida lifestyle also played a role in Delray Beach ranking so high.

“There’s more of a draw to this city than its spread of sunny beaches along the southeastern coast of the state,” the Verizon’s report says. “Not quite as high on the education scale as Weston but higher than Kissimmee, Delray Beach is a happy Floridian medium with the shortest average commute time between the three cities. It enjoys a thriving industry of restaurants, nightclubs, retail shops, and art galleries, which is important to keep in mind when considering where to put your business’s roots down. And hey, the beach might not be the most important thing, but a beach day every now and then definitely couldn’t hurt.”

Florida wound up with eight cities in the top 50, the others being Kissimmee (No. 7), Daytona Beach (11), North Port (39) and Sarasota (44).

The Top 50

  1. Portland, Maine
  2. Weston, Florida
  3. Missoula, Montana
  4. Southfield, Michigan
  5. Delray Beach, Florida
  6. South Jordan, Utah
  7. Kissimmee, Florida
  8. Rochester Hills, Michigan
  9. Rapid City, South Dakota
  10. Bismarck, North Dakota
  11. Daytona Beach, Florida
  12. Broomfield, Colorado
  13. Lauderhill, Florida
  14. Evanston, Illinois
  15. Alpharetta, Georgia
  16. Redondo Beach, California
  17. Wilmington, Delaware
  18. Eau Claire, Wisconsin
  19. Rockville, Maryland
  20. Logan, Utah
  21. Greenville, South Carolina
  22. Flagstaff, Arizona
  23. Walnut Creek, California
  24. Mansfield, Texas
  25. Maple Grove, Minnesota
  26. St. Charles, Missouri
  27. St. Cloud, Minnesota
  28. Georgetown, Texas
  29. Eagan, Minnesota
  30. Appleton, Wisconsin
  31. Schaumburg, Illinois
  32. Palo Alto, California
  33. Laguna Niguel, California
  34. Lehi, Utah
  35. Pawtucket, Rhode Island
  36. Novi, Michigan
  37. Cheyenne, Wyoming
  38. Homestead, Florida
  39. North Port, Florida
  40. Corvallis, Oregon
  41. Waukesha, Wisconsin
  42. Missouri City, Texas
  43. Waltham, Massachusetts
  44. Sarasota, Florida
  45. Lafayette, Indiana
  46. Medford, Massachusetts
  47. Redlands, California
  48. Gaithersburg, Maryland
  49. Canton, Ohio
  50. Taylorsville, Utah


Source: SunSentinel