- September 1, 2019: Vol. 31, Number 8

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Lending trends: Limited competition and positive market fundamentals have supported the construction finance business

by Loretta Clodfelter

A convergence of factors has served to make some investors take a look at investment in construction finance. But financing development comes with its own set of challenges and risks for investment.

Trends in the real estate market are driving good opportunities in the construction finance space, says Michael Lavipour, managing director at Square Mile Capital Management.

“Unlike past cycles, supply and demand is relatively in check,” explains Lavipour. “You’re seeing demand outpacing supply in most asset classes in most markets around the country. Clearly, there are some exceptions, but as a general macro theme, that’s the case. You’re seeing good cash flow growth. Occupancy is rising in most markets and most asset classes.”

While real estate fundamentals are still generally positive, the lending market has undergone a dramatic transformation, which has created opportunities for nonbank lenders. Lavipour points to “the general pullback from tradi

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