Alliant’s Krawitz Sees Greater Caution from Borrowers

Borrowers in the commercial real estate space have plenty of options, yet the ready availability of debt isn’t making them complacent. If anything, over the past few months they’ve become more careful about not overloading their holdings with debt. Connect Media recently sat down with Charles Krawitz, Chicago-based VP and head of commercial lending at Alliant Credit Union, to get his take on the current climate for borrowing and lending.

Q: Compared to late fall/early winter, are you finding potential borrowers to be more confident now in current and future business conditions, and therefore more likely to borrow?

Charles Krawitz: With the current economic expansion running into extra innings, borrowers are growing increasingly more conservative and are generally leery of over-encumbering their holdings with excessive debt. Rather, we are seeing loan requests that frequently entail moderate leverage going in, with the ability to secure additional funds in the future predicated on sustained performance. While borrowers are not overly pessimistic, experienced property owners are keenly aware of the cyclical nature of the market and are increasingly shoring up their capacity to be agile in a downturn by moderating leverage.

Q: Similarly, has Alliant’s view of the outlook for commercial real estate changed in any specific areas over the past several months?

Krawitz: We are increasingly seeing space being used in novel ways, and we have grown comfortable with the fact that traditional long-term leases are giving way to more flexible arrangements that allow tenants to expand and contract as their business fundamentals change. In addition, we are receptive to ownership using space in creative ways that deviate from historic use. An example of this would be a landlord who decides to run an on-demand industrial space operation in a facility that previously housed a limited number of long-term tenants, or the office owner who turns part of a facility into incubator space.

Q: You joined Alliant approximately two years ago. How does the opportunity set for borrowers, and for Alliant to make loans, compare to the spring of 2017?

Krawitz: As our analytical and risk management acumen has grown, we have tailored our lending to appeal to highly-experienced owners with institutional caliber assets. This has allowed us to lend on larger opportunities and offer diverse loan structures. Success begets success, and our growth over the past two years has allowed us to deepen our relationships with top-tier commercial mortgage bankers.

Q: Beyond product offerings, what are the keys to growing a lending book of business in the current environment? What are borrowers’ expectations?

Krawitz: Deliverability is essential to gaining and retaining clients. To do this effectively, it is essential that we respond quickly to borrowers’ needs as opportunities are oftentimes fleeting. Acquisitions can quickly go awry if a lender does not live up to their promises. At Alliant, we will turn down business if we do not think we can move decisively to meet or exceed expectations.

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