Experts: Cash is the key for real estate market

Last week’s Urban Land Institute panel discussion about the state of real estate financing was, not surprisingly, pretty gloomy at times. But the experts stressed that the markets will get better. Although, they added that the easy credit of 2006 and 2007 that helped precipitate the financial crisis probably won’t appear again for a generation, if ever. For now, the best advice for a developer might be to keep your powder dry, because someone else’s foreclosure could be your opportunity. “Cash is what made everybody all that money in the last downturn,” said Omer Davis, regional president for western Louisiana with Whitney National Bank. “A lot of the real estate developers that I deal with think that cash is a bad thing; if you don’t have your money in real estate, then it’s being wasted. This is not a good time to have that attitude. If you have your cash, conserve it. If you have a banker that will lend you money on the good cash flow you have today, borrow it. Don’t wait until you need it, because we’re not going to lend it to you when your cash flow goes away.” Developer Steve Keller urged attendees to pay close attention to project fundamentals, like location and tenant quality. “Hopefully, you can convince a banker to loan you the money, and if things get bad, you still have that cash flow stream,” he said. “You’re going in with a center that has quality tenants with enough credit and a good location. If he doesn’t loan to you, who is he going to loan to?”—David Jacobs