Capital Flows, But Only for Right Opportunities

NEW YORK CITY-Several factors, including the ongoing European banking crisis and a shaky outlook for the US economy, have affected capital flows. But, according to industry leaders it is possible to get financing for the right type of deal. The two final panels at Wednesday’s RealShare New York conference, held at the Mariott Marquis Hotel and produced by ALM’s Real Estate Media Group, went in depth into capital flow and deal making, as well as the innovative public/private partnerships that are making the two possible. More than 200 people were in attendance.

At the “Investment and Capital Markets Update: What a Difference a Year Makes” panel, talk turned to the improvements in availability to capital seen since this time last year. Mark Weiss, head of capital investments at RFR Holdings, told the crowd that there is a lot of mezzanine money available for financing currently. “If leverage is important to you, there’s an awful lot of mezzanine money out there,” he said. “It goes on and on in terms of people who are willing to put out money in the mezzanine market.”

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Spencer Garfield, managing director at Hudson Realty Capital, told the audience that “there are plenty of players who do mezzanine on an asset with quality sponsorship in a good market.” Smaller assets in B markets, with less experienced sponsors might have a harder time, though, he said. “We used to be a mezzanine business and from our perspective mezzanine financing is really nothing more than a levered first mortgage position.”

As for where the money is coming from, Erwin Aulis, COO of Northwood Investors, said that he thinks “the world has changed in the last 60 days” and that the market has gotten much more difficult. “We’re moving toward core properties as well,’ he said.

During “The Dynamic Dup: Public Private Partnerships” panel, another route to capital was the focus: the increasingly popular public/private partnerships that have been getting so much development completed.

“As the budgets become tighter and tighter, there is going to be a need to look into this type of development,” John Marcic, portfolio management division director at the US General Services Administration said of public/private partnerships.

Jay Cross, president of Related Hudson Yards, spoke to the audience about the inherent conflicts that arise through the partnerships. “The good news is that the public/private negotiation period is behind us—all our zoning is in place.”