Amid today’s uncertain economic environment, where many traditional capital sources have pulled back, commercial real estate finance company Greystone is finding that creativity is key in complex transactions.
For several months during the pandemic, for example, the firm’s bridge lending platform had to be very selective in what it financed, as many of its capital partners shut down their lines or lending platforms. In order to not penalize borrowers for temporary performance setbacks, Luann Gutierrez, Greystone’s managing director of bridge lending for healthcare, told McKnight’s Business Daily that the firm began offering more “earn out” type features in its term sheets.
“This way, when the borrower’s operations return to some level of normalcy, they can still utilize full leverage for the future permanent take-out,” Gutierrez told McKnight’s Business Daily. She added that the firm has also had to conduct site inspections virtually to help keep business moving forward.
In terms of FHA lending, Scott Thurman, Greystone’s chief credit officer for FHA lending, noted that it’s mostly been business as usual to get transactions closed. However, in instances where a facility’s occupancy has been greatly impacted by COVID-19, the firm has recommended lease-up reserves when appropriate, or have waited to close until the facility demonstrated it could service the loan.
“HUD has been a great partner in figuring out how to manage the COVID risk, acknowledging the funding from the CARES Act and not just arbitrarily putting a huge reserve burden on a borrower,” Thurman said.
Finally, for transactions involving majority independent living units, Neal Raburn, Greystone’s managing director of seniors housing finance, added that the firm has explored a myriad of options for clients, including several that don’t necessarily fit within Greystone’s “internal products.” These include pivoting to a floating rate in some instances, to allow for flexible prepayment when lending parameters loosen.
“We’ve also had to work with some alternative capital sources when traditional capital was on the sidelines or lending at very conservative terms,” Raburn said.