Clockwise from top left: Brannon Hamblen, Michael Moran, Richard Smith, and Greg Newman.
Brannon Hamblen, Michael Moran, Greg Newman and Richard Smith
President; executive managing director of originations; senior managing director of originations; managing director of originations at Bank OZK
Last year's rank: 11
For anyone paying the least amount of attention to the world of commercial real estate construction lending, it’s been clear for a while now that Bank OZK is a major player.
After originating a whopping $14 billion of CRE loans in 2022, the Little Rock, Ark.- based commercial bank came down to Earth in 2023 with a still impressive $7.22 billion in originations across 70 transactions. All told, Bank OZK carried $33.7 billion in active CRE commitments across 341 loans by year’s end.
“From the early days of the real estate speciality group, construction finance has been our focus,” said Brannon Hamblen. “Others may not do construction lending, but the way we do it is built around low loan-to-cost [ratios], low loan-to-value [ratios], meaning a lot of equity in the game with the dominant sponsors in the country that do commercial real estate development.”
Among the biggest deals the bank facilitated as a senior secured lender were a $220 million senior construction loan to Hines for the mixed-use FAT Village in Fort Lauderdale, Fla.; $211 million and $241 million senior construction loans to Southwest Value Partners to build Nashville Yards, a mixed-use, multifamily, ground-up neighborhood project; and $112.9 million in senior construction financing to Fulton Street Properties to build 919 West Fulton Market, the only new office project in Downtown Chicago in 2023.
And the secret ingredient to these massive, albeit risk-averse, loans? One word: Pre-leasing.
Bank OZK required Fulton Market to be 30 percent pre-leased prior to approval; it required Nashville Yards’ office component to be 40 percent pre-leased and its retail component to hit a 70 percent pre-leasing target.
“It’s very simple. You say, ‘Before I make any construction advances to you on my loan, you must have this much pre-leased on a lease that’s approved by us,’” explained Michael Moran. “They need to satisfy the conditions under which we say, ‘Yes, let’s go’ and fund our loan. It’s incumbent on them and our leasing team to bring good tenants and good leases.”
This type of firm but fair relationship banking goes beyond senior lending and into the subordinate debt world, where Bank OZK utilizes its Rolodex of over 90 mezzanine and subordinated debt groups to find creative solutions to its largest construction loans.
“We might be the most prolific bank that works with subordinate debt across the country,” said Moran. “It helps deals get done because of our ability and willingness to work with others.”
