NEW YORK— Robert Knakal, chairman of real estate brokerage firm Massey Knakal, pinpointed Sep. 15, 2008 as the day the U.S. financial system went sour.
“Everything that happened before Sep. 15 is irrelevant,” Knakal said. He was part of an expert panel of specialists in the commercial real estate arena at a function in New York on Wednesday.
Equity is key to obtaining a loan in a commercial lending market that is grinding at its slowest pace in more than 20 years, the experts said.
“Nothing is moving fluidly, credit is easing, but easing at an incredibly slow pace,” Knakal said. He noted that banks are doing things he has not seen banks do in 25 years—the level of scrutiny banks are undertaking is more excessive than he has ever seen.
“They’re afraid of making a mistake and being criticized for it… You’re negotiating every deal three times today.”
More Equity Required
Borrowers are requiring more equity to come to the table and mezzanine lending is finished, said Gregg Winter, founder and principal of commercial lending firm W Financial.
“If I had to think of the single biggest difference between before and now, it’s leverage.” There are more pessimistic assumptions in the underwriting—even with 80 percent leverage, he said.
