Insights Jun 10, 2018 Elion Partners

Debt Terms Present More Cautious Lenders; Drives Need for Lower Leverage in Acquisitions

At last month’s ICSC RECon, the annual Global Retail Real Estate Convention in Las Vegas, several interesting trends were captured by the panelists and journalists who covered industry leaders’ commentary. One particularly staggering trend was that in retail, lenders are currently more risk-averse than they have been in previous years. The current terms of debt are not favorable as lenders are becoming more cautious. This is particularly relevant to retail locations, such as malls that feature struggling department stores, in line with recent retail sector performance. This presents challenges for properties that require the greatest influx of capital to execute on their redevelopment plans.

This aligns with our investment strategy at Elion Partners, which focuses on the long-term preservation of capital for our clients. As we seek to continue serving as stewards of our clients’ capital, we approach real estate investing with the mind of wealth managers, focusing on sticking to acquisitions with moderate to low leverage ratios. We believe that now more than ever, in the current investment environment, lessened debt is the most sustainable way to invest in real estate, particularly as we shift traditional retail properties into mixed-use projects.