Posted Jun 20, 2023, 9:54 PM
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Detroiter4life
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Join Date: Jul 2001
Location: Back home in Georgia!
Posts: 4,061
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Bank backs away from Detroit Target financing talks, but developer vows to complete it
Quote:
Jonathan Holtzman, who runs Farmington Hills-based City Club Apartments, said there was a term sheet — but not a loan commitment — from one of his long-time lenders, Associated Bank out of Chicago, but the bank backed away from the project.
"I'm not going to speak for Associated Bank," Holtzman said. (I've asked Associated Bank to speak for itself in an email requesting comment on Tuesday morning.)
"I can only tell you Associated Bank is not involved in the project, not because of the city, Detroit, the project or the borrower or the deal."
Without speaking directly about Associated, Holtzman said stress in the broader commercial real estate market — particularly the office sector — and more macro issues related to the liquidity of many banks have caused difficulties for developers to secure construction financing.
He said people have been "sucking money out of banks" and instead investing in treasuries at 4% or 5% rates, causing liquidity issues for some banks. "If a bank doesn't have liquidity and then has all these troubled office loans and you say, 'Hey, I want a loan for an apartment building,' they don't have the money," Holtzman said.
Adam Lutz, a commercial real estate finance expert who is president and CEO of Lutz Real Estate Investments based in Birmingham, said broadly that construction financing has substantially slowed due to banking, economic and real estate-related issues like the ones Holtzman described.
But, in an interview last week, Holtzman vowed that the City Club Apartments Midtown development would move forward with financing from a different lender. He said he is in conversations with both Flagstar Bank and Fifth/Third Bank.
"Could Midtown start at the end of the third quarter? Maybe. Could it start at the end of the fourth quarter? Maybe," Holtzman said. "We are 110% committed to build in Midtown. There isn't a chance that we're not building Midtown."
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https://www.crainsdetroit.com/real-e...et-development
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