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It is highly likely that development of all types will remain subdued for a few more years. Although developers are hoping to start projects that had been put on the shelf in 2007, the reality is there is, and will remain, very limited construction financing. The construction financing that will be available is low leverage and usually requires a personal guarantee. I am working on financing two development projects in Manhattan right now for very credible developers, and the projects make very good economic sense from a cost and market basis, but finding construction funding that is priced at an economic level, and that does not require large personal guarantees is extremely difficult. Nonrecourse financing is possible but the cost of capital becomes equity like so it is not conducive to making the project economically viable and the risk justified if you pay for equity but it comes in the form of debt.

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