Navigating commercial lending with Mike Forshee: Glasslake Funding's innovative approach

The commercial lending market is undergoing significant shifts, presenting both challenges and opportunities for lenders, brokers, and sponsors alike. In a recent interview, Mike Forshee, President of Glasslake Funding, shared his perspective on the current state of the industry, the gaps in financing, and the importance of collaboration in driving successful transactions.

Watch our exclusive interview with Mike at the Toronto Real Estate Forum or find key takeaways from his insights below.

Key takeaways

1. Addressing market gaps in commercial lending

Glasslake Funding initially focused on small-balance commercial loans under $5 million, identifying a gap left by major banks pulling back from this segment. However, the company has since expanded its scope, targeting larger loans exceeding $50 million. This shift highlights the growing need for lenders who can provide bridge financing and cut larger checks without relying on syndication.

Forshee also emphasized the underserved middle market, particularly loans in the $6–$10 million range. This segment often struggles to find competitive financing options, especially for B-class buildings backed by A-class sponsors. By offering solutions in the 6–8% price range, Glasslake aims to fill this void and provide tailored financing options.

2. The role of bridge financing in a dynamic market

Multifamily properties remain a strong asset class, with new developments continuing to emerge. Forshee noted that bridge financing plays a pivotal role in supporting these projects, especially as sponsors seek higher leverage levels amid shifting economic conditions. This type of financing is critical for sponsors with tight business plans and well-defined exit strategies, enabling them to navigate the complexities of the current market.

3. Collaboration between lenders and brokers

Forshee underscored the importance of collaboration between lenders and brokers to ensure efficient and successful transactions. Rather than operating as adversaries, these parties must work together to present the sponsor’s story, articulate the value-add of the deal, and align on investment returns and exit strategies. Clear communication and alignment on expectations can streamline the lending process and improve outcomes for all stakeholders.

4. Canada’s sophisticated commercial real estate market

As Glasslake Funding expands into Canada, Forshee highlighted the sophistication of the country’s commercial real estate sponsors. Despite the current economic climate, Canadian sponsors are realistic and well-prepared, often presenting tight business plans and seeking higher leverage levels. This creates opportunities for lenders to provide capital for high-quality transactions while meeting investors’ yield hurdles.

5. The importance of risk appetite and investor alignment

Forshee emphasized the need for lenders to balance risk appetite with investor yield expectations. By focusing on quality assets and aligning with sponsors who have clear business plans, lenders can play a unique role in providing capital that complements traditional bank financing. This approach not only addresses gaps in the market but also ensures sustainable growth in the commercial lending space.