How CRE bankers can be strategic partners for investors

Savvy developers know to turn to their commercial bankers for strategic advice and innovative financing and lending options. By forging these relationships at the local level, companies can take advantage of industry data, increase their bid competitiveness and establish long-term growth goals.

The Business Journals recently talked with Capital One Senior Vice Presidents Syeda Hashmi, Mary Lucy Lester, Damon Reed and Lou Rosado about how commercial real estate clients can get the most out of their banking relationship. The Q&A has been condensed and edited for clarity.

Could you tell a story about a commercial real estate client who has benefitted from a long-term relationship with a local banker?

Lou Rosado: One client who has had a 25-year history with the bank comes to mind. Early on, the client was trying to learn about New Markets Tax Credits intended to improve blighted communities. Together, we found a way to leverage these tax credits to convert an old warehouse in the Bronx into the community’s first commercial gym. It benefited the community in many ways as a health-minded asset that also created jobs. More projects followed, like turning a derelict building in Asbury Park, New Jersey, into retail and a movie theater. This is an example of how the client and the bank can partner on growth plans and execute strategies together.

Damon Reed: I have one client I have worked with for 15 years. When he started, he owned five properties. Since then, I’ve been able to secure attractive financing on his properties through the years, and he has been able to grow his portfolio to over 30 properties.

How can commercial real estate investors use data to make better decisions, reach benchmarks and gain an edge over their competitors?

Mary Lucy Lester: Bankers understand what data is most relevant based on how the market is moving. Rent prices six months ago could be different from rent prices today. Data is so accessible now that it is part of the due diligence on the front end of any investment, development or acquisition opportunity. In addition to public data, there are a variety of private data sources investors can use to get information about vacancy, rent, sales comparisons and tenants. Predictive analytics also can help those in CRE [commercial real estate] forecast market conditions like vacancy rates, property values and rent.

How can commercial real estate investors improve competitiveness through the banking relationship?

Syeda Hashmi: Commercial bankers are important strategic partners, where typically, the advice comes with the relationship. Discussing loan options, exit strategies and leverage tolerance is where the banker can be a valuable sounding board.

Rosado: Strong relationships allow bidders to be more competitive because they have certainty of execution and financing lined up. The relationship also allows the bank to understand the business and the growth plan and align the capital plan appropriately. Bankers can also bring new ideas to the table for CRE clients. There are a lot of subscriptions and services out there for these clients to tap into, but they may not know which ones are the best for their company. The banker can introduce clients to new solutions that come to the market and provide insights for smarter investing.

What role does the commercial banker play as real estate investors look at long-term growth strategies?

Rosado: Over time, the relationship brings with it speed and surety of execution. The client has the assurance they are going to get the deal, which helps them plan their projects and be proactive.

Lester: The relationship also means the bank already knows the investor is creditworthy, which takes that step out of the process and allows the client to jump straight into the transaction. This speed also improves competitiveness over the long term.

Reed: Additionally, the banker is an advisor across the lifecycle of the relationship — for example, when the client buys a certain property, refinances an existing loan early or places long-term debt or short-term debt on a property.

What are some key questions that commercial real estate clients should be asking their bankers to ensure they're maximizing value?

Reed: Clients should want to know how long their banker has been in the business, their level of experience with various financing options and whether they have a successful track record of getting deals closed.

Hashmi: Existing and potential clients have a right to ask and understand if the banker — as well as the institution he or she serves — has the experience, knowledge and capacity to form a meaningful, growth-oriented partnership.

In terms of growth goals, how important is it for investors to have access to customized solutions and an array of real estate loan products?

Lester: That’s really what sets a larger bank apart from some of the regional competitors. There’s nothing we see that we can’t find a solution for, whether that’s secured or unsecured lending or agency financing. Having a big tool chest allows us to tailor a solution to a client’s specific needs.

Rosado: Our clients need to stand out in their deals, and when the financing is customized, it could possibly help them win a bid. Having access to a wide portfolio of financing options can really make a difference.

Learn more about Capital One’s custom commercial real estate solutions, including balance sheet lending, agency financing and institutional specialties.

With the resources and experience of a Top 10 U.S. commercial bank, [1] the Capital One national commercial real estate team delivers tailored financing solutions. With a $95B+ portfolio, [2] the Top 6 agency lender [3] offers a suite of permanent and construction, loans including industrial, multifamily housing, offices and student housing.

Sources

[1] Top U.S. Domiciled Bank Commercial Banking outstandings. Source: Individual Bank Q3 2021 Earnings Releases.
[2] Capital One-reported data, reported as of February 9, 2022 unless otherwise noted.
[3] Fannie Mae reported 2021 Multifamily DUS(R) Lender Awards and Freddie Mac reported 2021 Top Optigo(R) Lenders by Volume.