From a financing perspective, the retail sector continues to be challenged, but there are good gems to be acquired too. From a lender’s perspective, there are particular challenges to retail deals getting done:
• lease roll overs,
• expiring leases with no backfill identified,
• downward pressure on retailer credit,
• lack of transparency on retail sales figures, and
• long term permanent loan take-outs.
All of these issues can have significant impact on leverage levels, pricing, and whether or not a deal can even garner interest from a lender.
And who’s the culprit threatening retail? Why e-Commerce, of course.
However, in the CRE (commercial real estate) finance community one size definitely does not fit all. Opportunistic lenders are seeing an increased flow of opportunities since they require a creative and entrepreneurial lens.
Tenant mix, strategic plans for maintenance or repositioning, the leverage level, and the strength of the sponsorship is very important. Lenders need to understand and underwrite the story for success. The right tenant mix today typically is a mixture of food service (restaurants), entertainment and services … those services that can’t be ordered and shipped by Amazon, et al, more commonly termed “e-commerce resistant”. The retail center is starting to look a little like office services, just as the industrial park is beginning to resemble some retail. As the lines blur lenders are adjusting underwriting parameters.
The disruption caused by technology has increased the risk of hanging on to old business/investment models, but has also created opportunities for creative investors and problem solvers. These investor/borrowers are best served by aligning with equally risk tolerant lenders for successful acquisition and refinancing. This, however, is a decidedly smaller pool than it was even a few years ago.
So how do you find these guys?
They can be elusive! You might want to enlist the services of a mortgage broker.
For specific representation, give us a call at Counsel Mortgage.
We offer a variety of products and services, ask us how we can assist you today:
Counsel Mortgage Group®, LLC
NMLS #178927
AZ MB #0909580
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Today’s post is written by Michael Green, Commercial Loan Originator for Counsel Mortgage Group, LLC.
Copyright © 2019 Counsel Mortgage Group®, LLC.