Certainty Is the Key in CRE Financing

Graziano: “With restrictions on banks and CMBS pricing, debt funds, mortgage REITs and online lenders have begun to fill in the gap and have become significant players in the lending world.”

IRVINE, CA—Investors who buy properties at auctions—which have hard close dates—value certainty of close above even attractive interest rates and high leverage, Tom Graziano, senior director, finance and capital markets at Ten-X Commercial, tells GlobeSt.com. Given all of the factors that could influence financing decisions for commercial real estate investors, we spoke with Graziano and Joseph Cuomo, SVP and director of business development at the firm, about the drivers for today’s market, the impact of increased transparency on the industry and other financing trends.

GlobeSt.com: What factors today are driving CRE financing?

Graziano: Investors who are looking to acquire new properties or refinance existing properties in today’s market are pursuing loans that have attractive interest rates, high leverage (loan-to-value) and a significant degree of certainty. While each of these is important to all borrowers, for investors who buy properties at auctions—which have hard close dates—certainty of close is essential. Borrowers need to know that when the close date arrives, he or she will have secured financing to close the acquisition.

Cuomo: “Increased transparency and enhanced data access have positive ramifications across the industry.”

GlobeSt.com: How is increased transparency in the CRE industry impacting financing?

Cuomo: The influx of tech-based tools has increased not only the amount of data CRE professionals have access to, but also data quality. As this trend continues, the level of transparency for all market participants will increase in kind.

Increased transparency and enhanced data access have positive ramifications across the industry. Any player looking to analyze a property—prospective lenders, buyers, lessees, etc.—is able to access information more efficiently than ever before, which enables them to underwrite the property more quickly.