Ziel Feldman - HFZ Capital Group Part 4

October 10, 2018

EisnerAmper Real Estate Services Group Partner Lisa Knee discusses the recent trend of the developer-turned-lender with HFZ Capital Group Chairman and Founder Ziel Feldman in Part 4 of this series.


Transcript

Lisa Knee: Obviously cycles are something you know people should be studying and understanding the real estate industry and now we're going into an even more interesting cycle on the financing side. Their traditional financing isn't what it used to be and different developers and funds are entering into this financing space and for someone who's still active in the market with a lot of projects out there, are you seeing the difference, the tightening of the financing market and the difficulty that is out there to get capital and attracting foreign capital with everything going on right now?

Ziel Feldman: You're talking about the current period of time?

 

LK: Yeah I'm jumping to today’s cycle.

ZF: You always have to look historically so real estate, nationally and globally, a lot of different things impact it. Current exchange rates, demographics, voting patterns, population growth. My son is in the audience out there somewhere but he has suggestions all about demographics and this country continues to populate. One of the few industrialized nations that our population with our immigrants continue to grow. It’s still 2.1 kids per family equilibrium in a population while America has three kids with immigration and in our child birth. From a consumer perspective, I think the picture has been fantastic for real estate from the US from a commercial perspective and of course residential perspective.

So the money generally tends to follow opportunities. When we broke into the market in ‘91-’92, the best time to be buying real estate is when you're coming or you're projecting it coming out of a crash but there was nobody available. So unlike this Bank of Austria loan we got, it was very hard to find real estate. People ended up with no coin. In 1992 to invest in real estate was like the IRS calling. In periods of when it comes time to be buying, and that's true a lot of different businesses, when in stock market or whether you're any kind of hard assets financially. So then it was very difficult to get money and it was the time to be buying. In the crisis of 2009, we were also one of the most active buyers and there again, the best of times are the most difficult times to get most attractive capital.

We've been on a big upswing since then to the current period of time and capital has been much more abundant. Having said that, depending on where you are on the cap stacks, real estate lending still did not reach the levels that it reached before the financial crisis even right now. All these other opportunities are the lenders and what they call “on banks” that are funding and filling that gap between where traditional lenders were making loans, the Chase Manhattan Bank and JP Morgans of the world. Now they're being filled with fortresses in the Blackstone and then capital tends to get either more expensive or less expensive depending on where you live in the cycle. More recently there's a perception that it's hard to get financing for some kind of projects because the market has maybe gotten ahead of itself from evaluation perspective and projections. So all but the heartiest of developers are having a hard time getting financing like construction financing and we are one of the few that have been successful.

 

About Lisa Knee

Lisa Knee is a Tax Partner and Co-Leader of the national Real Estate practice and leader for the national Real Estate Private Equity Group with expertise in the hotel, real estate, financial services, aviation and restaurant sectors and is a member of AICPA, New York State Society of Certified Public Accountants and the New York State Bar Association.

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