Five Questions With Professional Bank CEO On Lending in a Commercial Real Estate Boom


Professional Bank has been growing quickly, an expansion fueled by its focus on commercial real estate lending in South Florida.

The bank, headquartered in Coral Gables, has $2.6 billion in assets, and nine branches in South Florida. As of mid-2021, Professional Bank had $875 million in commercial real estate loans on its books. That was up from $778 million six months earlier.

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“We are one of the fastest-growing banks in Florida,” said Dan Sheehan, the bank’s chairman and CEO.

Sheehan spoke to Commercial Observer about his perspective as a lender in South Florida’s commercial real estate boom.

Commercial Observer: What’s your biggest challenge?

Sheehan: I believe there is an abundance of liquidity. There’s probably too much debt chasing too few deals, which is putting downward pressure on pricing. Buyers love the lower cost of capital, but that is often reflected in the purchase price, and seller expectations reflect that cost of capital.

Any concern about another bubble in commercial real estate?

Every quarter we disclose our weighted loan-to-value ratio. It was 51.7 percent through our last quarter. The difference is that compared to last time, there’s a lot more equity capital. At least from the regulated bank’s perspective, the leverage is much less than it was last cycle.

What property types are you focusing on?

I love apartments, wish we could do more apartments, but it’s hard to compete with agency debt. Really well-located industrial and retail we love, too.

You didn’t mention office.

We do have office in our portfolio as well. I would just like to see several quarters go by without COVID or the Delta variant or work from home or remote work being in the headlines. There’s so much influencing what office usage is going to look like going forward. I’d like to see that normalized before we make bigger bets on office. There’s going to be a conversation about air quality in offices, and about what’s the appropriate density of employees per square foot in offices. I just think we need a little bit more time collectively to figure out what it’s going to look like.

What concerns you about commercial real estate in South Florida?

All good things come to an end. At least short term, I do not anticipate value destruction in commercial real estate. But I certainly anticipate that the rate of price appreciation cannot continue at the pace it has been over the past year. I’m not saying it’s going down, but it does seem likely to normalize — and it would be healthy if it normalized. The government just carpet-bombed cash over the past 18 months. This is not intended to be a political statement, but I read that roughly a quarter of all dollars in circulation were printed in the past 18 months. All that capital has to find a home. It’s in the stock market, it’s in buying homes, it’s in buying buildings.

Jeff Ostrowski can be reached at