Are Lenders About to Cool on Miami?

MIAMI—There's a clear capital markets trend toward funding Miami condo developments. But is this rush about to slow?

GlobeSt.com asked Robert Vahradian, senior managing director of GTIS Partners, for his thoughts on the trend and its longevity in part two of this exclusive interview. You can still read part one: Are Capital Markets All About Relationship?

GlobeSt.com: There have been a series of construction loans announced for condo developments in Miami. Is this a trend? What do you think is behind it?

Vahradian: Construction financing is overall increasing, but lenders are still being selective and are financing only strong developers with good projects. Also, in this cycle, we are seeing more alternative lenders like finance companies rather than traditional money center banks.

GlobeSt.com: What does a development need to have in place in order to be able to secure financing from an institution like Blackstone or a traditional bank?

Vahradian: In my mind, to get financed, a development should have a strong location, a market-driven and exciting project concept and programming, experienced and well capitalized sponsorship and a high level of pre-sales with 40% to 50% deposits so as to de-risk the lender's market exposure.

GlobeSt.com: Do you think lenders will continue to provide construction loans in the coming months or will this activity slow down?

Vahradian: Given Miami's appeal as an important gateway city and high level of demand from international markets, I think lenders will continue to provide construction loans so long as developers bring good projects to the table, buyer demand remains strong and supply remains rational, and buyer deposits continue in the 40% to 50% level.