catches up with UC Funds on lack of transparency on retail sales figures, among other challenges. According to the firm’s CEO, Dan Palmier, there are opportunities for those lenders and owners who are creative and have an entrepreneurial lens.

Dan Palmier

LAS VEGAS—From a financing perspective, the retail sector continues to be challenged, but there are good gems too. That is according to Dan Palmier, CEO of UC Funds, who chatted with about all things retail, surrounding last week’s ICSC RECon.

According to Palmier, e-commerce is the prime agent in making lenders very wary of most projects. “From a lender perspective, we see particular challenges to deals getting done…. lease roll over, expiring leases with no backfill identified, downward pressure on retailers’ credit, lack of transparency on retail sales figures, and ultimately challenged, long term permanent loan take-out.”

All of those issues, he says, can have a significant impact on leverage levels, pricing, and whether or not a deal is going to get done.

But he says there are opportunities out there. “Opportunistic lenders are seeing an increased flow of opportunities since they require a creative and entrepreneurial lens.”

When asked about hot retail markets, Palmier says he looks at opportunities on a case by case basis rather than a market. “The tenant mix, strategic plans for maintenance or repositioning, the leverage level, and the strength of the sponsorship is very important,” he says. “We need to underwrite a cogent story for success; a mix of the right tenants-typically a cross between food, restaurants, entertainment, and services.”

He tells that his firm typically plans on some turnover and roll and that a blend of tenant types is more and more important today. “Having e-commerce storefronts and healthy integration of new ‘anchoring’ retail like urgent cares or WeWorks are also a plus. If the owner has bought the retail center right and is nimble, we will structure financing to get the deal done.”

Talking more about the rise of e-commerce, Palmier explains that he is seeing opportunities for investors to buy in this sector as never before at attractive prices and the significant yield on cost. “Yes, e-commerce is a real risk and operators need to understand it and have skills and local market savvy to be nimble, to respond, and to be creative problem solvers,” he says. “When you buy right in a market, you give yourself ample room for unforeseen turnover and financial woe.” | By Natalie Dolce