Lenders and borrowers alike have come to recognize some fundamental truths of the retail financing market in the e-commerce era: Most big box users need to right-size their store footprints and prototypes; new construction in urban settings needs food and entertainment components; and friendly loan terms are increasingly predicated on the sponsor’s track record. In Texas, direct lenders of all types have remained active in the retail arena, with certain capital sources aligning themselves with specific sub-types of the asset class. For example, CMBS lenders often focus on stabilized properties with cash flow concerns, whereas regional banks might be better bets for new construction or redevelopment deals in high-growth markets. Properties distressed by tenant turnover or rent roll uncertainty can appeal to debt funds, and life companies seem to have a soft spot for grocery-anchored product. “The biggest point of optimism for the property type in 2019 lies in the fact that lenders are still lending on retail,” says Chad Owens, vice president in NorthMarq Capital’s Houston office. “Specifically among smaller life insurance companies, CMBS lenders and banks, retail is still a big part of their businesses.” Owens says that in Texas and beyond, there is ample capital available for …
