A Day in the Life of a Commercial Real Estate Financial Intermediary

Working with a financial intermediary is not as dirty as it sounds even if finance is the world’s second oldest profession…

What is the role of a financial intermediary?

A financial intermediary is an institution or individual that serves as a middleman between real estate capital sources and borrowers in order to facilitate real estate debt and equity transactions.

The role of the financial intermediary is to act as a conduit between a borrower and the lenders. The financial intermediary puts together a loan package based on the information provided by the clients.

Financial intermediaries package the loan up in a way that is descriptive, provides all the salient loan points, and identifies both the plusses and minuses of the deal for the various capital sources.

Financial intermediaries maintain relationships with all types of capital sources including money center banks, regional banks, local banks, credit unions, life insurance companies, Wall Street investment banks, pension funds, debt funds, hard money lender, mezzanine lenders, preferred equity sources, and joint venture equity.

By staying abreast of the market, financial intermediaries have a better handle on what is happening in the market, and they know which lenders and lender types are the most active in the market.

They also know which lenders and lender types are the right capital sources to reach out to for a specific deal especially in economically challenging times. This is particularly important since March of 2022 when the Fed started raising rates. Even in December of 2023, the Fed has only just started pausing.

Financial intermediaries are extremely valuable because they navigate the market on behalf of clients. They can provide a range of quotes for your deal and even if the lender doesn’t quote on your deal, you will have the knowledge that your financial intermediary went to a range of sources.