It's been a slow few months in the world of real estate lending. For example, Steven J. Lurie, partner in the real estate practice group of Greenberg Glusker, a Los Angeles-based law firm, has handled only one retail financing since Sept. 15, when the investment banking giant Lehman Brothers filed for bankruptcy, taking with it whatever was left of the scant confidence in the global credit markets. The, which funded a $65 million purchase of the 173,000-square-foot Larkspur Landing Shopping Center in Marin County, Calif., was arranged through City National Bank and featured a five-year term, an interest rate in the 6 percent range, a loan-to-value ratio of 50 percent and a recourse requirement. Plus, the bank felt comfortable with the borrower, James Rosenfield, principal of J.S. Rosenfield & Co., with whom it has been doing business for the past 20 years. Considering current market conditions, if the terms were any less stringent or if the lender did not have absolute faith in the borrower, it would be unlikely for even that deal to go through, Lurie notes.
“Certain banks are being very difficult with their customers — trying to get loans paid off, not making new loans, not renewing loans,” Lurie says. “Senior debt is not available on terms anything like what was available before the meltdown.”
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In the Moment
As economic indicators across the U.S. change by the hour, with one region after another falling victim to the deepest recession in decades, retailers find themselves in a world where site selection decisions have become extremely challenging. Markets considered up and coming six months ago may no longer deserve a second look today as past projections for population growth turn out to be wrong and businesses that were previously thriving close down.
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Best of the
As part of a story about broad retail trends, this St. Petersburg Times story mentions that Westfield is scaling back the hours of operation at its U.S. properties.
This story calls the decision an “unprecedented move.” That's not exactly true. In January, Simon announced plans to cut hours at its New England malls to maximize efficiences. In this climate, reducing hours of operation seems like a responsible decision by management.
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