Federal Credit Unions: A CRE Stealth Lender
Join us at the Union League for this half-day conference which is designed to deliver informative panel discussions that will cover leasing, investment and development/redevelopment across the property type at RealShare PHILADELPHIA on February 27.
WASHINGTON, DC-Well known and much appreciated by consumer finance specialists, credit unions have maintained a low profile in the commercial real estate borrowing community. It wasn't until the financial crisis of 2008, when just about all sources of debt dried up that credit unions started to receive a larger-than-usual wave of inquiries. Since those days, they have not turned back—and, in fact, have expanded their CRE lending operations, along with the demand.
Consider NASA Federal Credit Union. For the last three years its commercial real estate lending portfolio has increased each year, Andy Stafford, director of Commercial Real Estate, tells GlobeSt.com. "Last year we saw a 23% increase in our portfolio; the year before that it was 16%." For 2013, he predicts, commercial real estate lending by the NASA Federal Credit Union will likely rise between 30% and 35%. Nor are these micro transactions; loan sizes range from $1 million to more than $20 million.
That latter number may be surprising to some – after all, credit unions are defined by their regulatory commercial lending cap of 12.25%. However, via a Credit Union Service Organization, or CUSO, credit unions can form cooperatives with other credit unions to combine lending capacity, Stafford says. The resulting debt is very similar to a syndication loan. "Say we get a borrower looking for a $20 million loan. We might only want to lend $5 million, but we can get three partners in the CUSO to each lend another $5 million," he says.
For the smaller loans, between $1 million and $4 million, NASA Federal Credit Union would likely keep the loan on its own books, Stafford says.
So exactly who are these borrower members? They run the gamut from companies looking to finance an expansion of an owner-occupied building acquired earlier or a middle-sized business seeking to open an office in a new market. They are often builders and developers looking to finance new or existing projects, Stafford adds. "We now get a steady flow of traffic in our lending offices, with each borrower presenting a slightly different profile."
Stay Tuned for Part 2: 8 Reasons Why Your Next Lender Could Be a Federal Credit Union
GlobeSt.com and NASA Federal Credit Union are hosting a webinar, "Lending Alternatives You Can Bank On," on Nov. 4 at 1 pm ET. To attend, register here.
For MORE insights on finance trends, check out Ackman Ziff's "Capital, Fueled by Innovation" home page, which provides Thought Leadership positions on a variety of commercial real estate trends, transactions and movement.
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