Commercial Mortgage Financing Advisors:

Forward commitments continue to be an important tool enabling borrowers to lock in a low rate today, but to delay closing for up to 9 months, thus, in many cases, helping to get the best of both worlds: avoid paying a big prepayment penalty on the old loan, while locking in a great low rate on the new loan.

Construction loans are back -

Now that any remaining condo unit inventory in NYC left over from the recession has sold through, demand for new condos (especially at the upper end of the quality and price spectrum in Manhattan and Brooklyn) is up, inventory is down, and lenders are back in the game, albeit they are only willing to lend to developers with a successful track record, that are financially very strong and in possession of, or in contract to buy, a well-located property acquired at a good basis with all requisite entitlements and approvals either already in hand, or at least well within sight).

Now that any remaining condo unit inventory in NYC left over from the recession has sold through, demand for new condos (especially at the upper end of the quality and price spectrum in Manhattan and Brooklyn) is up, inventory is down, and lenders are back in the game, albeit they are only willing to lend to developers with a successful track record, that are financially very strong and in possession of, or in contract to buy, a well-located property acquired at a good basis with all requisite entitlements and approvals either already in hand, or at least well within sight).

Winter & Company continues to close construction loans along the following lines: approximately 65% loan-to-cost, with an interest rate of 4.5%, for ground-up luxury condominium developments in good locations. Similar terms are available for viable rental developments as well. Recent locations where we have been able to successfully source construction financing include TriBeCa (2 deals, Brooklyn, 1 deal) and Long Island, 1 deal).

Winter & Company also sources joint venture equity and helps to create winning partnerships for development deals. Yes, banks are lending, but the bar has been raised: the development team must be strong; with the necessary financial firepower (read: liquidity) and requisite development expertise in order to attract funding.

Winter & Company is an advisory firm that is somewhat unique, in that it also has an in-house bridge lending affiliate called W Financial (www.w-financial.com), which can sometimes prove helpful to provide bridge financing as an interim solution when a time-of-the-essence deadline looms and a bank loan is simply taking too long to close. That scenario actually occurred recently with one of the above-referenced deals where the committed bank loan could not close until both the D.O.B. and Landmarks approvals were finalized, yet the time-of-the-essence closing date needed to be met. Thus far, the one certainty about the impact of the Dodd-Frank Act, and generally heightened regulatory scrutiny by bank regulators, is that it has further slowed down the speed at which banks can underwrite, approve and close loans.

Recent construction loan case study:

Winter & Company has closed a $10 million construction loan for the development of a 43-unit, 55 and over townhome community overlooking Port Jefferson Harbor in Long Island, NY. Although the developers had struggled in vain to find construction financing during the recession, by the time they found and engaged Winter & Company they had invested enough of their own equity in the deal to build much of the infrastructure, complete two model homes, establish a sales center and sign contracts with buyers for 17 of the 43 units.  From that platform, Winter & Company was then able to package and present the deal and the development team in a clear and compelling manner, and to leverage its strong construction lending relationships.  The result was a construction loan with an interest rate of 5% and a term of 24 months, which closed in late March 2012.

Ten of the site’s more than 18 acres are subject to a conservation easement providing a peaceful and quiet setting for the townhomes, many of which will enjoy dramatic views of the harbor and of Long Island Sound. The loan will be paid down upon sales of the townhome condominium units subject to a release price provision negotiated with the lender.