Commercial Financing is Available

Real Estate News Utah

 

Financing for commercial real estate projects is attainable, according to speakers at a property forum entitled “After the Meltdown: Repackaging Commercial Real Estate Transactions.”

 

“We have money today. We have incentives to lend,” said Ronald Schulthies, executive, VP and chief lending officer for the Bank of Utah, at the Tuesday morning event at the Marriott City Center. “But we are very fond of getting our money back.”

 

Schulthies explained that commercial lenders have excess funds and are interested in “putting their money to work.” But they are only willing to lend on “good loans and loans that can be paid,” he said.

 

Scott Sabey of Fabian & Clendenin reiterated Schulthies statement, saying lenders are looking for cleaner packages before agreeing to finance a project. The change in the economy has changed the market significantly, in turn greatly impacting the way lenders lend, he said.

 

“There is money out there. There is money to lend,” Sabey said. “But you have got to bring a clean package to the lender.”

 

Lenders are looking for answers to questions that weren’t as critical before the downturn in the economy, Sabey said. Bankers will no longer tell you how to do a project in order to get financing, he said. Money will not be loaned on spec projects. And lenders are looking for more complete information on proposed projects, he said.

 

Despite tightened lending standards, some projects are moving forward.

 

With the help of federal stimulus monies, the state of Utah has managed to move forward with some commercial projects, Lt. Gov. Greg Bell told forum attendees.

Proctor & Gamble will spend nearly $540 million in the development of its Greenfield Manufacturing site in Box Elder County. The construction of the NSA Data Center at Camp Williams will cost approximately $1.5 billion. The I-15 Core project, the largest construction project conducted by Utah’s government, will cost an estimated $1.7 billion. And the Mountain View Corridor road construction will total more than $350 million.

 

With these and other projects, Bell said approximately $5 billion will be put back into Utah’s economy. A move that will help the commercial market as it nears a bottom.

 

“It is going to be slow. We are going to have to feel our way,” Bell said. “The state is doing all it can to keep the pump primed.”

 

Even with these projects moving forward, Sabey predicted that the commercial market still has some time before it bottoms out.

 

John Taylor of Commerce Real Estate Solutions suggested that the recovery for the commercial real estate industry will be slow and painful for some. But the future holds promise for others, he said.

 

“Going forward we are going to see an increase in transaction volume,” Taylor said. “I think it will be two fold. Those (transactions) that follow new market rules will happen. And those (transactions) that are a significant discount, cash buyers won’t be able to hold back.”

 

Sabey would agree there is a bright side to the “doom and gloom.”

 

“It really has been bad, but we really have turned a corner,” Sabey said. He compared this recession to the depression. But on the bright said, he said this downturn has a clear rebound.

 

“It is a brave new world and we are all looking to know what is the new normal what is going to be the new regular,” Bell said.