By David Repka, Co-Founder Bison Financial Group
Let’s face it, the last few years have been astonishingly difficult for anyone in the “dealmaking game” as fear, uncertainty and doubt have crept into the capital markets driving reliable sources of capital to the sidelines. No pocket of capital has been picked as clean as construction funding of large-scale, complex commercial real estate development projects. With REO inventories mounting and defaults on the rise many sources of capital have exited construction funding with vows to never return.
Out of this chaos investors seeking yield and willing to take prudent risks have entered the construction space. Rather than lending money on a predetermined payback schedule as was the norm in the go-go days, this new breed of investors is intent on owning income producing assets for the long-term and is entering into joint ventures with experienced project developers to get access to sales pipelines that can take years or decades to build. The developer brings their bulging Rolodex to the party filled with potential tenants seeking expansion opportunities. The funding sources bring capital and an openness to funding construction projects. This is an opportunity for everyone to win:
- the tenant receives the exact, purpose-built space they want based on a build-to-suit;
- the community benefits from badly needed construction jobs;
- the investor receives a long-term income stream from a high-quality tenant;
- the developer’s Rolodex not their personal financial statement, credit report, or credit score determines the viability of a project.
With this program a developer with personal credit that has been battered and bruised by the Great Recession is once again eligible for funding. Who you know and what you know determines the viability of a developer’s next project. Read more on the types of eligible projects in the Nexus Funding Platform.