By Ron Davis – Reporter, Albuquerque Business First
Feb 28, 2020
This story is part of Business First’s Feb. 28 weekly edition on credit unions. Weekly edition subscribers can see all our coverage from that edition here.
Developers like Brad Allen like options when it comes to financing a project. Credit unions evolving from a consumer financial service to a player in commercial development financing have given Allen and his firm, Allen Sigmon Real Estate Group, more of those options. Over the last 10 years, he’s seen credit unions become competitive in the commercial lending realm.
“Credit unions have become pretty competitive with the banks when it comes to getting deals done,” Allen said. “They’re very quick and nimble and get us answers very fast.” Rarely does one lender become an exclusive partner with a developer on their projects, so a developer like Allen will go with a different financial institution depending on the type of project they’re doing. Certain lenders elect to finance a project depending upon whether it’s a ground-up development or repurposing or refurbishing an asset.
Allen said his firm went through Nusenda Credit Union for its purchase of a Los Lunas shopping center last year as well as the acquisition and renovation of Laramie Square in Albuquerque. Nusenda declined to comment for this story. Allen said the credit unions have been filling the void of mid-level community banks that have departed the market over the years such as First Community Bank and Charter Bank.
Harold Dixon, president and CEO of State Employees Credit Union in Santa Fe, said he’s taken advantage of that void as his credit union has gotten into commercial lending over the past five to seven years and evolved from mainly a consumer resource for car and home loans.
“The commercial piece was a great piece for us,” he said. “We just saw a need in our community as a lot of these community banks were either consolidating or shutting down with doing lending, so we were able to pick up some commercial loans that they weren’t able to do anymore … It’s been a good piece for us.”
Kris Axtell spent more than 10 years with Wells Fargo as a commercial lender. He’s now the founder and CEO of Luna Capital Holdings on the other side of the lending table. He led 500 Market LLC’s purchase of 62,000 square feet at the Santa Fe Railyard last summer to fill the Market Station building with multiple local tenants. The group went through Enterprise Bank & Trust for the financing.
“Because the credit unions are a little bit newer to commercial lending, they tend to stay in the box more,” Axtell said. “With some of the community banks that have been doing this for a long time, they tend to get more involved in unique projects that impact the
community but don’t necessarily have the real estate-only metric that credit unions are looking for.”
There are upsides to going to a credit union, a local bank or a larger bank, Allen and Axtell said. Banks might waive guarantees where developers are essentially co-signing and backing the loan with the LLC created for the loan, but guarantees are a must when going through a credit union. While credit unions might provide quicker answers, the capital and portfolio might be limited.
“As a borrower, Allen said, “competition in the lending world has helped us get projects done.”
Originally reported on ABQ Biz First: https://www.bizjournals.com/albuquerque/news/2020/02/28/why-developers-are-considering-credit-unions-for
Allen Sigmon Real Estate Group is a full-service commercial real estate company based in Albuquerque with an expertise in acquisitions, brokerage, development, and property management. As a local company, we pride ourselves in our knowledge of the New Mexico commercial market and the relationships we are able to foster compared to larger national firms. Our office works with every kind of commercial property; including office, industrial, retail, land, and multifamily. Our understanding of client needs and concerns not only comes from our experience as an office but also as owners and investors of commercial property ourselves. We have an excellent team in place that is eager to work on your behalf; our results speak for themselves.