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CRE owners may benefit from liberal investors

Florida developers who seek backers for their commercial real estate projects may be pleased to learn that investment firms have no problem getting into deals that banks might have to pass on. While government agencies like the Office of the Comptroller of Currency are taking great pains to oversee bank investment activities, other investors who aren't subject to such stringent regulations feel free to invest in a broader range of projects.

Bloomberg Markets points to self-reported data from major investment firms as evidence that tightly regulated banks may take a backseat to other options. Between 2012 and 2016, for instance, Blackstone, Apollo and Starwood all increased their property asset holdings by billions of dollars. Even though there are general concerns about overspending in such times of flagging economies, these institutions, colloquially known as shadow banks, may be more capable of absorbing any negative fallout, such as an anticipated market collapse.

In addition to enjoying the flexibility to invest in deals that traditional banks wouldn't deal with, shadow banks seem to be less choosy about the amounts they'll lend. Although some companies make notably bigger loans than banks do, they may also underwrite smaller projects with risky outcomes. Experts say that heightened regulatory climates might ensure that this situation persists for some time.

Although market climates may make it easier for companies to fund their CRE projects, it's still important to be cautious. Lenders who seem to offer favorable financial terms may not provide the same advantageous legal agreements that their bank counterparts might, and as novel loan sources become accessible, CRE property owners may see their contractual obligations change. Those who experience financial difficulties, for instance, could assume unexpected liabilities. Discussing lending options with an attorney could make it easier to ensure that a given deal is advisable.

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