Wednesday, September 28, 2011

The Middle Market Investor: Making the Best of an Elusive Market

By most accounts, commercial real estate is about the only bright spot in the ongoing housing crisis: commercial building values have appreciated significantly in key urban markets, multifamily unit investors are enjoying steady revenue streams (a result of lower vacancy rates), and lenders seem much more willing to extend credit to commercial investors than to residential consumers. These factors foster guarded optimism that the commercial sector is injecting life into the housing industry.

The real story, however, paints a picture of a divided commercial sector where it is only select parties reaping the benefits. Institutional investors, hedge funds, and real estate investment trusts - the major traders in large commercial building deals - are the ones receiving favorable treatment from lenders. The purported gains in commercial real estate mostly bypass another significant member of the investment community --- the middle market investor.

This middle-market investor typically deals in transactions from $5MM to $50 MM and whose scope may include the typical multifamily building, but often extends to office buildings, new or distressed developments and joint venture opportunities. Because their deals often don’t fit the traditional underwriting mold, capital for complex real estate projects can be elusive. This is where a strong relationship with a commercial broker can make the difference between affecting a successful venture or a missed opportunity.

Brokers can tap a number of different funding sources ranging from the traditional (commercial banks) to private equity and hedge funds to which the middle market investor does not have access. Depending on the capital requirements of any given transaction, brokers also have the ability to structure a financing package from a combination of funding sources. In a tight-credit environment, good brokers know their funding sources’ lending restrictions and procedures, and vet loan proposals prior to submitting full loan packages thereby saving their clients both time and money.

Good brokers are also able to tap a strong network of strategic partners to facilitate all of the ancillary components related to a transaction including appraisals, escrow services, and tax issues to name a few.

In the current environment, working with a broker should increase the odds for middle market investors to reap the benefits of commercial real estate’s success rather than just reading about it in the press.


The Peak Corporate Network entities provide unparalleled access to conventional debt financing, joint venture equity, mezzanine financing, bridge financing and structured debt for the commercial real estate market as well as knowledge and expertise (including access to off-market properties) in both local and national markets.

With headquarters in Woodland Hills, California, in addition to commercial real estate solutions, including 1031 Exchange services, the Peak Corporate Network entities offer residential real estate services, escrow services, asset management and disposition, residential and commercial loan workouts, loan servicing, foreclosure services, REO solutions and more. For additional information, please visit www.peakcorp.com

2 comments:

  1. Good brokers are also able to tap a strong network of strategic partners to facilitate all of the ancillary components related to a transaction including appraisals.

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