Identifying an oustanding real estate lender.

Whether you're looking to finance a residential condo conversion in Manhattan's Flatiron district, a land loan in the Hamptons or White Plains, or a retail strip acquisition in New Jersey, you need a lender that is experienced, reliable and able to put the financing together quickly, at the right cost and with the right terms--no matter the complexities of the deal.

How do you identify the right lender for your needs? From many years of experience in the real estate industry--as a developer as well as a lender, and through all types of commercial and residential transactions--I have found that an outstanding lender can be identified using a few basic criteria. These have to do with experience, consistency of terms over time and across transactions, rapid response to the borrower's needs, and commitment to an ongoing relationship with the borrower.

After participating in real estate transactions over a long time period, and from both sides of the deal, it's clear that the right lender is one that inspires confidence in his capabilities, and in his commitment to be there for you--in both good and difficult times. That is where the development of a continuing relationship is important. In today's business world, it is very common to conduct business on a transactional basis--moving from one service provider to another, depending on short-term variations in terms and conditions.

Developing a relationship is a two-way street, however--and, for optimum results, the borrower should be willing to make a commitment to such a relationship as well-once they have determined that the lender meets a number of key criteria.

What are these key criteria?

First, to offer the best and most capable service, a real estate lender should have a substantial history and experience in the real estate industry--i.e., a strong institutional history of making such loans through a range of both ups and downs in the economic and real estate cycle.

A further indication of excellent lending capability is significant industry experience of the bank's senior real estate lending officers. The more experience represented by the bank's lenders, the better they can assist in responding to the borrower's needs, and the better able they are to develop creative solutions to complex and time-sensitive deal requirements.

Consistency of deal terms across time and across transactions is another indicator of an outstanding lender who is working toward a longterm relationship with the borrower. Consistency does not mean that terms of a similar deal will not change over time; changes in market conditions will dictate differences in interest rate levels, for example.

Consistency here means that the lender seeks to maintain a consistent relationship in its loan terms relative to changes in market conditions. For instance, if a deal a year ago was quoted at one over prime, a consistent rate today would also be one over prime.

Consistency tells the borrower that the bank wants to keep it as a customer--rather than take advantage of changing market conditions.

Along with strong experience and a commitment to consistency in loan terms, a lender who is dedicated to a long-term relationship with the borrower will attempt, at all costs, to provide rapid response to the borrower's needs. This is a critical indicator of an outstanding lender, and is especially important with deals that are highly time-sensitive.

Rapid response is a hallmark of real estate lending at Sterling National Bank. Here's an example: A customer had a highly time-sensitive transaction to complete--45 days at the outside. The acquisition loan was for $8.5 million. There was a hitch--the purchaser had to clear up an environmental issue before the deal could close.

This was a very short time frame in which to resolve an environmental issue--but with strong experience, and creative financing techniques, working together the loan closed on time.

It also helps to expedite results when the borrower has access to the most senior management and lending officials at the bank.

At Sterling, for example, our motto exemplifies this philosophy: "Our doors are open all the way to the top."

Furthermore, for real estate as well as other types of borrowers, it helps to be working with a full-service banking institution that can offer a wide range of additional services, such as lines of credit, equipment leasing, letters of credit, deposit and cash management services.

Following the guidelines discussed in this article will help a borrower identify and select an appropriate lender that will provide not only financing but long-term advice and guidance as well.

KENNETH COHEN 

SENIOR VICE PRESIDENT

STERLING NATIONAL BANK