Financing retail in this cycle is a far cry from the golden days of retail pre-recession. With lenders today much more conservative and innately more forward thinking (i.e. payoff cap rates, square footage contraction and tenant consolidation, to name a few) than ever before, properties that would have had no trouble achieving financing in 2004–2006, aren't getting double takes in today's market.

In the past, lenders instinctively looked at centers with large credit tenants, such as a Walmart or Best Buy, as a good investment based on the theory that bigger was better. The market was in a state of euphoria, and lenders and investors alike did not see an end to retail's success.

Liberal underwriting and aggressive rental rates came as a result of this eternal optimism, and lenders were offering excellent terms, with up to 80 percent loan to value and even 10-year interest-only financing. The idea behind these stellar offerings was that these investments would only continue to grow, and values would be higher when the loans came due. The tenant growth during this time helped support this trend as well, with a demand for leasable space being fueled by rapidly expanding companies such as Target, Game Stop and Starbucks.

As we all know, this state of euphoria came to an end. And with property values not where owners had anticipated they would be, many of the loans that came due during the recession resulted in default.

Now that retail has started to rebound, lenders today have taken the lessons learned in the last cycle to heart, for the most part. Across the board, retail lending has become much more conservative, with many lenders only willing to finance with perhaps five years interest-only, as they want to make sure there are years left on a loan where the principal debt is actually being paid down.

Retail lenders today are also much more conscious of the tenants themselves and are looking very closely at each center's lease expirations, the credit of the tenants, and more importantly the future projections these individual tenants have for growth/contraction of units, and/or locations.

As an investor, Passco is focused on this same kind of investment, specifically looking for retail centers that contain tenants that are internet resistant. In other words, tenants that sell services or goods one simply can't get online, such as salons, restaurants, small bank branches, and even medical uses. Post-recession, these centers have become more favorable for both investors and lenders alike as they are deemed less susceptible to online shopping trends.

In addition, the big box retailers are simply no longer a sure bet. As these retailers work to make their brick and mortar stores more efficient and profitable, one of the favored methods is reducing the square footage of each store.

Today, most lenders have learned from their mistakes and have begun to focus on the dynamics of each asset before providing financing. These lenders are also more forward looking in terms of tenant mix and social demographic than ever before. Lenders today understand that retail is a different business than it once was and are shifting their lending criteria accordingly to ensure that many of the mistakes made in the last cycle are not repeated.

The views expressed here are the author's own.