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Credit crunch creates challenges for commercial real estate
Commercial real estate is facing a credit crunch, but there may be opportunities for nonbank lenders.
“The current U.S. banking environment is one of rising interest rates and more conservative lending standards,” said Simran Bindra, a partner in Thompson Coburn LLP’s Los Angeles office, in an interview with IREI. “The net result is reduced liquidity, which has had a significant impact on the current real estate market.” According to Bindra, for all of the new financing options that have gained popularity over the years — such as EB-5 consortiums, crowdfunding options, etc. — banks and the liquidity they provide remain the grease that makes the commercial real estate market run. “Unfortunately, there is a bit less grease out there,” said Bindra.
He pointed out that transactions at the top end — those involving institutional, well-funded buyers — are still moving forward, as are distressed opportunities. “But the vast middle of the market is almo