Peak Capital Group Aims to become Gold Standard for Creative Funding
It is probable that we will look back at 2007 as the year of change, not only in the direction of real estate but also in the fundamental way lenders can operate. The days of easy credit and high LTV's will at best go into a long hibernation for most capital sources. As we look back at 2007, it is clear that after the residential sub-prime meltdown the tightening managed to trickle into commercial lending in July. Spreads increased, Libor increased and the need to find lenders willing to jump in became a long shot.
Presently, the commercial sector nationally has started to show weakness although there are still pockets of strength. The cap rates have shown an upward trend while the rates and down payment requirement have similarly increased. The quality NNN type properties are still demanding top dollar but only in the best of locations. Borrowers are not bidding up values and are reluctant to jump into the first deal they find. Deals that were able to get easy financing are now stalling and falling out of escrow or getting price reductions.
Gil Priel, Managing Director of Peak Capital Group, LLC (peakcapgroup.com) explains that their ability to respond quickly and creatively has made PCG a source of funds for many borrowers and brokers that were left out in the dark. As a portfolio lender with an institutional partner, PCG is not driven by the need to securitize loans or search for new capital sources. "This gives us a strategic advantage going into this year. As lenders face up to bad debt on their books, they will be forced to sell off their assets at steep discounts."
Priel further explains that PCG can provide the needed capital for different situations. "Our short term financing can serve as the bridge to keep a deal from falling apart and give a seller the time needed to maximize his return, or equally, our funds are available for a buyer in need of immediate capital in order to take advantage of a distressed situation. The keys are our flexible underwriting, which allows nationwide cross collateralization, as well as quick turnarounds."
Priel cites that the need for creative financing will become more important than ever as the REO market accelerates and more sellers are under duress. “Lenders with portfolio funds will be a primary source for funding in 2008 and beyond. Having immediate access to capital will be the "gold" for success in the coming years.”
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