Hardly put-off by waterfront dangers, RBS Citizens Bank just closed on a construction loan for The Fallon Co’s $300M, 515k SF build-to-suit office for the law firm Goodwin Proctor. It’s at the 21-acre, mixed-use Fan Pier site in the Seaport, which Citizens views as an important area in a “dynamic, growing part of the city,” EVP for commercial real estate Patrick Burns tells Bisnow. The bank is financing other projects there, he says. The Seaport has advantages: there’s land available (and sea available for any floating buildings), it has good infrastructure, and is close to the commuter rail.
The capital markets are opening because the economy is improving and banks want solid assets to replace the lesser ones purged during the recession, says Patrick (above). A secondary driver: Citizens’ major competitors are out there. About one-third of the way into this real estate cycle, banks see construction loans as less risky than those made pre-recession. Properties are substantially pre-leased; developers and their partners are putting more equity into deals. Senior and mezz debt combined reach an LTV of up to 75% compared to as much as 90% previously, Patrick tells us.
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