ADC Commercial Real Estate Financing

Acquisition, Development & Construction (ADC) commercial real estate financing is due for a shot in the arm to be sure.  According to information from the SBA, more than 4 out of 5 entrepreneurs fail to obtain capital for their businesses, and that means our economy experiences a blizzard of ADC commercial real estate financing opportunity failures on a regular basis.  ADC commercial real estate financing has more complexities than acquisition financing due to the fact the ADC activities are diverse and involve various other default risks that are not typically a material issue in an acquisition financing.

Successful ADC commercial real estate financing outcomes in the future are going to have to address the loss severity risk issue that has chased the major banks out of the market vertical and created opportunities on multiple levels outside of the major banking operations vertical.  While FINRA, Dodd-Frank, OCC and the SEC have all played a huge role in stifling the potential for real economic growth in the ADC capital finance segment, in the end, it is going to be up to the industry to create future opportunities that include proactive risk management approaches.  If you want the money, you will have to learn to dance this new tune.  This will apply to all of the parties, not just the issuer or borrower.  Profits only happen on outcomes in this industry, so those finance participants who simply place the burden on the issuer are going to probably be made to suffer significant revenue penalties and increased operating costs.

The times, they are a-changin’…

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