Real estate mogul Craig Hall is looking to increase Hall Group’s financing portfolio for nationwide office developments next year. Hall cited banks' recent reluctance to lend to new projects as a green light for his primarily development company to move in on the debt market, take on overlooked projects and make some overlooked money.
“We believe that the regulators have really constrained banks, and very few banks are making the kind of construction loans that they have in the past. It is a great opportunity for a nonbank that does not have the same restrictions to fill the gap,” Hall said.
Hall Group has been in the small-time lending business since 1995, but now that the company's own development pipeline is full (it is planned out for the next 20 to 30 years), it is pursuing new lending opportunities of $300M in loans this year and a projected $500M more in 2018. According to Hall, this increase in lending activity is an aggressive move into what he feels is an untapped market.
“There are a lot of good developers that are shut out from the normal debt market, and we are helping make things happen,” Hall said.
Hall Group's lending portfolio is composed primarily of hospitality projects, but Hall is looking to expand it to include other project types with special emphasis on office construction. Of the total $500M Hall expects to lend out in 2018, he said he would like for $100M to $200M — 20% to 40% of Hall Group's loan budget for next year — to be in office construction. Most of these loans will be in the $15M to $75M range, Hall said.
According to Hall, his company’s advantage over the banks is twofold. First, it is less encumbered in lending, and second, Hall and company feel they have the real estate know-how to find and invest in good projects.
“As real estate professionals for many years, we understand a lot about what makes a project work or not work,” Hall said.
Though his intent is to step up Hall Group’s lending for office development nationwide, Hall said he feels especially good about investing in Texas and particularly about investing close to Dallas.
“The closer to Dallas, the better, as far as I believe. I do think that we are fortunate to have great job growth and job growth equals office, so it is a sort of a sweet spot,” he said.
What are Hall’s favorite submarkets within his favored city? Pretty much all of them except Richardson, which he said is overbuilt.
Hear more from Hall at Bisnow's Big South Office Event Nov. 30, where he will give the keynote speech.
CORRECTION, NOV. 29, 3:00 P.M. CT: A previous version of this article incorrectly stated the amount that Hall Group intends to loan out next year. Hall Group intends to loan $500M next year, bringing the two-year total to $800M.
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