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SAN DIEGO-The untold story in the financing realm is how well the US banking system has recovered since the financial downturn, according to Michael Marino, EVP and division manager for Wells Fargo Bank. Marino spoke during one of the general sessions during ICSC's Western Division Conference here last week.
“The recovery of the US banking system hasn't made the papers,” said Marino. “The banking system is very profitable, capitalized and liquid. Wells Fargo has $150 billion in excess liquidity.” The problem, he added, is that despite all that liquidity, deals can't be found.
Panelists agreed that cap rates will be roughly 25-50 bps higher in 12 months, and Arturo Sneider, a partner with Primestor Development Inc., said he would characterize the cap rate situation as “stable, but increasing” after that.
Another financing issue raised during the session was the changing loan-to-value in today's lending environment. Bruce Pomeroy, president of Evergreen, said many buyers need to provide 40% or higher equity capital for many deals and asked how they were going to do that?
Mark Schurgin, president of the Festival Cos., said family-and-friends equity structures have been well-received, but when you get above a certain amount of equity, institutional investors are necessary.
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