Crittenden CRE Finance Conference Highlights: Key Takeaways and Insights – Part 2 of 2

The author recently attended the Crittenden commercial real estate finance conference in Miami Beach which brought together industry experts and professionals, providing valuable insights into the current trends and challenges in the market. Here's a comprehensive summary of the next key points discussed during the event (Part 2 of 2)- if you missed the first article in the series click here:

6. Expansion of Government Related Lending Programs: 

    • SBA - Small Business Administration recently relaxed rules allowing floating-rate loans originated in the SBA 7(a) program to be retired with fixed-rate loans in the 504 program. These loans offer leverage up to 90% of cost. These loans are often used to finance owner occupied, business related properties which includes office, industrial, hotels, motels, self-storage, and senior housing. Floating-rate loans at 10-11% are being retired by loans at 8-9% interest. These loans are full recourse.
    • USDA - The United States Department of Agriculture has a Business & Industry Loan Guarantee Program.  These loans offer leverage up to 90% of cost and are restricted to areas with populations less than 50,000 which is shockingly roughly 97% of America. Unlike the SBA 7(a) program that maxes out at $5 million, the max loan with a USDA guarantee is $25 million.
    • Agency Lending (Fannie, Freddie & FHA) - multifamily real estate continues to be funded by loans guaranteed by the Agency lenders. Agency lenders have a mandate in good and bad times to provide liquidity to the market. 
    • C-PACE - Commercial Property Assessed Clean Energy Loans have been a mechanism to provide additional leverage and a lower cost of capital for developers and investors to upgrade their properties and make them more energy efficient. The loans are secured by a property tax assessment, not a conventional mortgage. In an interesting twist, C-PACE is being used to provide “rescue capital” to projects that have experienced cost overruns and are running out of interest reserve. Two C-PACE lenders that spoke on panels have seen their loan volume rise year over year to approximately $650 mm each year to date.

7. The Rise of Creative Financing:

      • The Mainstreaming of Ground Leases - Bifurcating a property into land and leasehold improvements is a way to add leverage and reduce the overall cost of capital. 
      • Investors like the predictable cash flow and low risk inherent in a ground lease and will pay a lower cap rate (higher price) for the cash flow associated with the land. Cap rate on multifamily ground lease can be as low as 50-80 bp over 30YT.
      • Preferred property types include multifamily, student housing and industrial properties.
      • A note of caution: a non-subordinated ground lease if not paid can foreclose out all other liens.

8. Note on Note Financing:

    • Some lenders have stopped lending directly on CRE, and instead lend to non-bank-lenders that lend on CRE. 
    • These loans are treated differently by their regulators.
    • Many lenders that actively made CRE loans in the past have pivoted to this strategy. The thesis is why lend 75% LTV directly to a property owner at S+350 and have regulators on your back for lending on real estate when you can lend 75% of cost to a professional lender (who has an additional layer of cash and due diligence in the deal) at S+425. This lender made a 75% loan reducing your last dollar exposure to 56.25% of cost?

9. Construction Financing:

  • Regional banks that once made 66% of all construction loans have significantly reduced lending or have reserved construction funding for only their best, long term relationships.
  • Conventional lenders are requiring compensating balances of 5-10-20% of the loan amount further reducing net loan proceeds.
  • Non-bank lenders have picked up the slack and are actively making construction loans.
  • Leverage that was once 75 to 80% of cost has been reduced to 55 to 60% of cost. 
  • Pricing from regional banks on a market-rate apartment community at S+ 275 to 350 has been replaced by leverage of S + 450 to 850 from a non-bank lender.
  • The gap is being filled by common equity (LP equity/JV equity) or common equity plus a slice of preferred equity. 
  • Since the equity gap to fill is so large, preferred equity is being utilized to fill the gap. Preferred equity investors have become more conservative seeking their last dollar of risk at the 75th or 80th dollar rather than at the 85th or 90th dollar in the recent past.
  • One bright spot remains high-leverage construction financing for developers of Single Tenant Net Leased properties. Financing for this type of property with creditworthy tenants is available at up to 100% LTC.


The Crittenden Commercial Real Estate Finance conference served as a platform for rich discussions on the challenges and opportunities in the industry. The evolving nature of the industry, the rise of alternative financing solutions, the focus on asset quality and professional borrowers were central themes. As the market continues to transform, these insights will likely guide industry players in navigating the complexities of commercial real estate.

Author: David Repka

About the Author:
David Repka is the Co-Founder of Bison Financial Group in St. Petersburg, FL.
Bison arranges debt and equity financing for commercial real estate investors and developers.
Bison has relationships with investors across the risk spectrum funding acquisitions, renovations, and new construction.

Click to learn more about:
Bison Financial Group