Are Capital Markets All About Relationship?

MIAMI—What's the state of construction financing? The answer to that question may depend, in part, on whom you ask.

GlobeSt.com asked a man who just secured construction financing: Robert Vahradian, senior managing director of GTIS Partners, in part one of this exclusive interview. GTIS, a major real estate firm based in New York City, has formed a joint venture with Eastview Development to build Biscayne Beach.

GlobeSt.com: How did Biscayne Beach go about securing the recent $120 million construction loan?

Vahradian: With lender interest level and competition sourced by our advisor Cohen Financial for this financing quite high, we ultimately financed the project with Blackstone given our existing relationship and confidence in their ability to execute on a timely basis. GTIS had completed financings with Blackstone prior to this one of approximately $250 million.

GlobeSt.com: The groundbreaking was in June 2014. How important is it to obtain construction financing at this point in the development?

Vahradian: Although the velocity of sales for Biscayne Beach indicates that we will not have to fund the full loan commitment amount, the $120 million financing commitment level, together with our equity investment and deposits from past sales, fully capitalizes the project development without taking into consideration deposits from any future sales.

GlobeSt.com: How significant is it to obtain a construction loan in this cycle, after lenders were nowhere to be seen for several years?

Vahradian: I believe our financing success is a reflection of the current strength of Miami's market, the project's high quality and sponsorship, and strong pre-sales level. Miami's being an important US gateway city and attraction to international buyers enabled the market to come back more quickly and strongly than most cities in the US, eliminating excess supply resulting from the downturn. It took a while, but more lenders are now recognizing the strength of the market and like the risk-mitigation resulting from buyer pre-sales with high deposit levels.