The value of relationship banking for the real estate industry

When you work with a commercial banker, their first priority should be understanding where you stand with your business and what you're striving to achieve. They go beyond just being your bank and become a strategic partner.

We provide our clients with a dedicated team of experienced bankers who take the time to know your business, the goals you are trying to accomplish, and the challenges that must be overcome along the way.

Let’s say, for example, a company manages 10,000 apartment units nationwide and aims to grow to 50,000 units. How can they reach that ambitious growth target safely and prudently?

CIBC can provide expert advice in situations like these.

We determine what you’re trying to accomplish and then create a plan to provide banking and credit solutions. We work to stay in constant contact with our clients to provide updates on how market changes could impact their business and financial situation.

The banking needs of different types of real estate businesses vary. A company that operates its properties through third-party managers may need credit and treasury management solutions that differ from a company that builds its systems in-house or one that uses a hybrid approach.

That’s why it’s beneficial to work with a banker who gets to know the operational side of your commercial real estate business along with your asset lending needs. Through that understanding, they can deliver the services needed regarding deposits, treasury services and lending. You and your banker may discover new solutions that aren’t immediately obvious.

Recently, we talked to a client who owns an apartment building that’s performing well. We discussed what the increase in interest rates means for their options to future refinancing. Thanks to our partnerships in capital markets, we introduced ideas that could reduce the client’s interest volatility down the road after they resize the facility, including interest rate caps, swaps and collars.

We provide insights and tools to manage fluctuations in interest rates and other market variables to aid with risk management. It takes a deeper relationship to discover sophisticated solutions.

While there is a temptation to let inertia set in with banking relationships during periods of market calm, having access to financial products and services that can help effectively manage your cash flow becomes critical during more volatile times.

This includes much more than loans. Your bank should be continually improving its capability to support your company with the following.

• Liquidity management: Helping you maintain an optimal level of liquidity by offering safe investment options that earn competitive returns.
• Automated payments and collections: Implementing automated systems for rent collection and vendor payments to speed up processing time and reduce manual errors.
• Fraud prevention: Providing effective technologies and practices to detect and prevent fraudulent activities.
• Enhanced reporting, analytics and reconciliation: Running a treasury management platform that works with your accounting and property management software to provide enhanced visibility into cash positions and simplify reconciliations.

Technology continues to evolve. A relationship-based banker should have their finger on the pulse of the latest developments and, more importantly, find ways for clients to take advantage of them.

For example, we’re working with a client that has grown to the point where they need the ability to provide reporting to various types of investors and capital providers. As we discussed this upgrade to their treasury management reporting, we also took the time to review their accounting systems. Through this review, we discussed ways to automate different parts and make the entire process more seamless between the two systems. This helped free up time for their accounting staff and made them more productive.

Economic conditions don’t always cooperate with existing plans. Some level of change along the way is a given. We’re willing to work with our clients to provide options, whether it be for the modifications of existing loans or refinancing options for maturing loans.

We understand that smart business owners are constantly reassessing their financial strategy, including managing cash flow, the pace and scale of capital expenditure investments, timelines for asset sales or loan refinances, and being well positioned.

By developing a banking relationship ahead of time, you’ll have a direct contact when it's time to shift gears. It’s during those periods of stress and uncertainty that having a bank as a strategic partner really matters.

As part of this planning, there are opportunities to be introduced to CIBC’s private bankers and wealth management team to help manage your personal finances. You can coordinate your real estate business growth directly guided by a personalized financial plan.

By working with a relationship-focused bank, you can receive these business benefits in addition to competitive rates.

The CIBC commercial real estate has decades of experience working with companies like yours. To learn more, visit our Commercial Real Estate banking page.