Capital's Eager to be in Denver
Equity and debt capital, which form the oxygen of real estate growth, are as plentiful as they've ever been—and a large amount of it wants to be in Denver because the city has one of the strongest long-term growth prospects in the nation. That was a main takeaway at Bisnow's Denver Capital Markets event this week at the Four Seasons Denver.
Kicking off the event were Wright Johnson president Aaron Goforth and Polsinelli Law principal Mahsa Aliaskari, who are EB-5 experts. Aaron and Mahsa discussed EB-5 as a tool for raising investment capital, which they said isn't "fringe capital" any more—it's mainstream, and funding a variety of commercial real estate projects nationwide. They said they'd like to see more EB-5 funding for Colorado projects, such as hospitality, assisted living and mixed-use. Any project that creates a certain number of jobs, after all, can qualify.
Snapped: Ballard Spahr partner Joey Lubinski, Sage Hospitality Resources CIO Michael Everett and Equity West Partners principal David Naus. The capital market these days is characterized by an excess of equity looking for deals, especially acquisitions, and a dearth of deals to do, our speakers noted. That's especially true in gateway markets, but more recently also in markets like Denver; and in hot properties types like hospitality, but also to a great extent in other properties, as long as their markets have strong fundamentals.
Essex Financial Group president Jeff Riggs and Great-West Financial SVP and head of commercial mortgage investments Brian Schwartz. Denver's an appealing market for lenders not only for its fundamentals, the speakers explained, but also because its cap rates here haven't "gotten as stupid as other markets," as one of them put it. Lenders can make the exact same loan—$10M, $20M, $50M—in a place like New York and Denver, and would make little to nothing in New York, but a point or two on the Denver loan, because it's cash-flow driven.
Ladder Capital managing director Peter Smith and Genworth Financial VP and director of investments Bruce Friedman. Some lenders are turning to Denver and other strong non-coastal markets simply because it's very hard to do profitable deals in those coastal markets any more, our speakers said. There's so much competition now to make loans (in Denver and pretty much every market) that lenders need to be quick and provide a high level of service if they're going to thrive in the current climate.