Construction Lending: Issues in Underwriting Commercial Construction Loans 2023 - Webinar | Iowa Bankers Association | 27 November 2023 | Virtual Event

This program provides an overview of the key issues involved in analyzing and underwriting commercial construction loans and assessing the risk involved. In a sense, the underwriting is a mix of (a) CRE project viability, (b) sponsor analysis and (c) construction feasibility. Further, the underwriting is difficult due to several unknowns. First, usually there is no historical operating information. Second, the developer/sponsor may have a number of other projects under construction or in the pipeline.

Why you should attend:
• Understanding the type of project (full construction vs. repair/remodel/repurpose)
• The three major areas of risk to the developer when constructing an investment property
• Determining project feasibility and cash flow sustainability
• Engaging a third-party market feasibility report
• Working from developer projections or market data
• Issues with pre-leasing (or lack of preleasing) and your bank’s appetite for speculative (spec) risk
• Re-lease and rollover risk into the future
• Key steps in analyzing the developer/sponsor’s experience and financial condition and key information needed beyond tax returns
• Assessing the construction risk
• Special issues with owner-occupied loans
• Identifying the degree of risk and communicating appropriate levels of monitoring and controls to the administrative team, over and above the basic processes used to assure that the project is within budget, on time and proceeding per the plans and specifications