“The capital markets are again awash in liquidity so the availability of financing for retail projects, even in secondary and tertiary markets has improved significantly. The return of a healthy CMBS market is particularly beneficial for retail, as it is the primary source of non-recourse financing for second and third tier projects/locations.” as per Cushman & Wakefield’s Patrick Crandall.
According to Gary Mozer, principal and managing director at George Smith Partners, the most prominent trends in today's capital markets is a shift in lender focus from a property's static performance to the sustainability of a property's cash flow over time.
“Lenders learned valuable lessons from the economic downturn, and are now much more concerned with the underlying characteristics of tenants themselves as opposed to simply the cash flow they produce on paper.”
Previously, he adds, lenders often only looked at the quantitative basics of a project when determining whether to finance the asset. “These basics would typically include tenants' sales figures, the anchor tenant's credit rating, and the asset's payment history. Today however, lenders are much more focused on the longevity of the asset's income stream and are delving deeper into the long-term viability of a retail property's tenants.”