Residential deals drove lending activity at Parkview Financial in 2020. The firm closed a record loan volume last year, despite the pandemic, with a total of $600 million in construction loans. Residential projects, both apartment and condo, drove 90% of that activity.
“While we lend on all property sectors, last year multifamily comprised the bulk of our financing activity. Apartment and condo projects made up about 90 percent of our loan volume,” Paul Rahimian, CEO, Parkview Financial, tells GlobeSt.com. “The majority of our sponsors in 2020 were small- to mid-sized developers who were looking to secure financing quickly and have hands-on support when it came to the entire lending process. The “time is money” theme was pretty consistent feedback we heard from them. They needed to get their projects going and done as soon as possible in order to capture their return on investment.”
Focusing on residential reflected the demand more than a strategic shift. In term of strategy, Rahimian said that the firm tried to ignore short-term trends. “We frequently talk about strategy relative to the pandemic as some noteworthy market dynamics have emerged, but we question the longevity of many of the trends that are making headlines,” he says. “There are certainly useful data points coming out for lenders right now, but there is also a lot of noise from the marketplace that we have to be careful doesn’t enter into our decision making.”
Instead of shifting strategy, the firm focused on its core principals for lending. “From a corporate perspective, we worked to block out the external noise in 2020 and instead spent the year really internalizing who we are as an organization and what we stand for,” adds Rahimian. “The result was coming out of last year with a stronger sense of purpose and a team united around our core set of values, not to mention a record-setting year and fourth quarter.”
Parkview isn’t alone. Private lenders saw an influx of activity during the pandemic as more traditional lenders tightened lending standards and pulled back from the market. “As consensus began to form and really distinguish between safe assets and risk assets in the current environment, it was private lenders like us who were first to market,” says Rahimian. “Strong conviction, which at times like this runs contrarian, and discretionary capital that is able to act on that conviction are hallmarks of non-traditional lenders who are able to provide deal-saving solutions to borrowers.”
Banks generally don’t have the flexibility to respond to changing lending conditions, opening up opportunities for other operators, according to Rahimian. “Structurally, banks navigate economic headwinds like a locomotive on a fixed track and can either accelerate or decelerate their activity along established, regulated tracks,” says Rahimian. “We can rapidly change course based on our convictions, a luxury that banks structurally are not afforded. The fourth quarter was a record quarter for non-bank lenders who I credit with opening up construction finance capital markets and bringing competition back to a very distressed landscape in dire need of the vitality that competition provides.”
Non-bank lenders weren’t the only capital providers to see an increase in activity. Everybody benefitted, “ says Rahimian. “The borrowers and especially the economy and communities that these loan dollars poured into. Lenders like Parkview make loans for a fixed return, but the economic activity that a loan commitment generates is exponential. It is very rewarding to play a part in getting Americans back to work during such challenging times.”