Lenders Look For Certainty

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					                                                                                                                                                                           CONSTRUCTION
                                  Steven J. Dundas
                                                                                                                                                                             ROUNDTABLE

Lenders Look
For Certainty
FINANCING IS HARD to
come by for construction
projects, but many develop-
ers are now scaling back,
according to Patrick L.Ryan,
executive vice president of
First Bank in Williamstown.
      Ryan said First Bank is
considering growing its book
of construction loans, espe-
cially after a capital infusion
in October increased its




                                                     BOOM AND RUST
lending limit from $1 million
to $3.8 million.
      But bankers are shying
away from funding specula-
tive projects that do not have
a minimum amount of
                                                                                                                                          Economy’s collapse a threat
                                  Steven J. Dundas




bookings with down pay-
ments (for residential units)
or substantial pre-leasing (for
commercial space), Ryan                                                                                                                   to builders across the state
said. “Lenders are looking
                                                                                                                                          The financial crisis and near-demise of insurance giant AIG has
closely at any type of project                                                                                                            sent shock waves through New Jersey’s construction industry,
based on future events,” as                                                                                                               prompting fears about everything from a downgrading in the rat-
opposed to cases where bor-                                                                                                               ing of insurance carriers — which could cause construction com-
rowers would repay their                                                                                                                  panies to default on their contracts — to a reduction in lines of
loan with cash flow from                                                                                                                  unsecured credit, which could make contractors ineligible to bid
existing operations, he said.                                                                                                             on certain jobs. NJBIZ assembled a panel of industry experts to
      Ryan said developers                                                                                                                discuss how AIG’s woes, the credit crunch and the economic down-
also are reluctant to buy land                                                                                                            turn have affected their businesses, and how they are preparing for
                                                                                                                                          troubles that may lie ahead. Participants in the panel included
and start new construction
                                                                                                                                          Michael Culnen, president of C&H Agency Inc.; Michael D’An-
without a degree of certainty                                                                                                             nunzio, president of D’Annunzio & Sons Inc.; Patrick McGowan,
that the market exists for                                                                                                                chief executive officer and president of McGowan Builders Inc.;
their product. They are cau-                                                                                                              and Jim Merrill, president of Star Capital Services LLC. NJBIZ
tious because construction                                                                                                                Staff Writer Evelyn Lee moderated the discussion.
finance typically is more
expensive than convention-                                                            
				
DOCUMENT INFO
Description: [...] bankers are shying away from funding speculative projects that do not have a minimum amount of bookings with down payments (for residential units) or substantial pre-leasing (for commercial space), Ryan said.
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