ULI Fall Meeting 2022: Toward Equality in Real Estate Development Debt Capital Access

Historically, the bulk of real estate development debt capital in the United State has come from commercial banks. Over years, US Bank Regulatory oversight encouraged them to adopt risk management and underwriting standards on developer experience that penalize individuals and firms new to the business. In addition, many banks have internal policies on deal size and segmented product offerings. The lack of access to traditional development debt capital has hampered development by women and BIPOC developers. Yet bank construction budgeting and monitoring processes applied through skilled and knowledgeable lenders have proven key to successful projects. How can emerging sources of debt capital without those experience and deal size requirements- like funds and crowd-sourcing- provide the valuable development funding oversight? Are CDFI’s (Community Development Financial Institutions) a solution? How can banks themselves overcome their experience and deal size thresholds to provide more equitable debt capital access?