Valley CRE lending bouncing back for some product types, expert says

Despite a slowdown when the Covid-19 pandemic hit and the stay-at-home orders that followed, commercial real estate financing in the Valley has continued to move forward, a Phoenix finance professional said.

Adam Finkel, principal for Tower Capital, said the firm has still been active in refinancing deals due to low interest rates, while “about a dozen” loans the firm was working on for hotels were canceled. However, construction loans and financing to convert former hospitality buildings into residential use have remained strong, and Finkel said he expects more activity in those types of conversions as a result of the pandemic’s effect on the hospitality industry.

The firm recently arranged three loans for multifamily properties totaling $44 million, bringing the firm to over $1 billion in loan arrangements since it was founded in 2015. The firm as arranged 143 loans, accounting for over 1.2 million square feet of office, retail and industrial space, 11,202 multifamily units and 2,625 hotel rooms.

Over the duration of the pandemic, Finkel said he has seen an increase in acquisitions after the initial drop-off in March, and investors from cities with higher costs of living are again interested in looking at Arizona.

“People still want to move here,” he said. “People want out of higher density cities.”

With business interruptions due to Covid-19, Finkel said lenders have been willing and able to work with borrowers to allow for more time or other considerations with their loans.

“For existing owners looking to refinance, the timing has never been better,” he said.

Finkel said there is still a high level of uncertainty about the market and the pandemic through at least the end of the year, but he expects his company will continue to have a strong year.

“We have a great handle on who the current capital is in the market,” he said. “We had a lot of bridge lenders get out of the market and sit on the sidelines, so we have our finger on the pulse to see who is in.”

The firm now employs eight people and Finkel said they plan to continue growing slowly while still remaining nimble.