(Missed RealShare Philadelphia? Connect with conference attendees anyway and watch and listen to sessions and more at RealShare Connect.) 

PHILADELPHIA-Life insurance companies have no appetite for Delaware properties right now. They are, however, interested in Philadelphia properties within certain perimeters: multifamily assets preferably, but CBD office is fine, as is industrial and grocery-anchored retail, according to Pete Davisson, founding partner of Jackson Cross Partners, LLC. So it goes with financing commercial real estate deals in these submarkets, panelists at the RealShare Philadelphia told the audience at the half-day event Wednesday morning.

“The availability of capital today compared to a year ago is not that different,” said Chris Terlizzi, SVP and regional manager at First Niagara Bank. What has changed is the type of projects and submarkets in which lenders are interested. That is always true, of course, but the events of the last three years now necessitates a nonstop taking-of-the-market’s-pulse by both borrowers and lenders. And the findings from these informal market assessments can vary widely.
 
For example, TD Bank is most comfortable underwriting projects that have some combination of preleasing, New Market Tax Credits, if possible, and a strong sponsor. Projects in the city are well favored right now, TD Bank’s SVP Timothy Proctor told the audience—the bank has numerous deals underway in Philadelphia proper. “The suburbs are slower and the office market is tougher. There, we are seeing large REITs provide capital.” 
 
By contrast, Terlizzi said First Niagara has been known to issue a term sheet on an empty building if it has a strong sponsor.  Yet despite the bank’s cautious approach, Proctor says TB Bank is underwriting for growth right now. “We have more time to look at deals. We have gone through the issues in our portfolio and can focus on growth.”
 
Borrowers that may be hoping for a more standardized lending approach—say, that one could expect from the CMBS market—will have to make do with local and regional banks’ balance sheets. Aside from life appetite for certain assets, that is where much of the financing is coming from now.

In many cases borrowers just got fed up with CMBS, especially when their loans ran into trouble and they couldn’t find just one person to sit down and talk through the problem, Terlizzi said--and banks are proving themselves able to provide comparable financing. “I see banks fixing Libor rates via a synthetic interest rate hedge,” he said.
 
Other institutional lenders, such as the GSEs, also are more open to negotiations with troubled borrowers, John Marr, senior vice president of Alliant Capital LLC, told the audience. “Fannie Mae is receptive to restructuring loans. The mistakes borrowers make is that they don’t sit down with the lender while they still have some cash they can contribute to a restructuring. They wait until they have nothing.” Matthew McManus, senior director at Marcus & Millichap Capital Corp., moderated the discussion.