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Despite Capital Shortage, Optimism Driving the New York Real Estate Market

Sterling's 2014 New York Real Estate Financing Flash Survey Provides Insights Into the State of the New York Real Estate Market

MONTEBELLO, NY--(Marketwired - July 31, 2014) - A recent flash survey by Sterling National Bank, the principal subsidiary of Sterling Bancorp (NYSE: STL), shows that New York-based real estate professionals remain optimistic about the future of the New York metro real estate market. Sterling's 2014 New York Real Estate Financing Survey revealed that 96 percent of respondents active in the real estate industry are either very optimistic or somewhat optimistic about the state of the market overall, thanks to its unique market conditions.

At the same time, half of the respondents said they are frustrated with their current options for raising capital. This highlights a gap that could impact the industry's growth potential, but also presents a significant opportunity for banks that can provide real estate expertise and underwriting services that include non-traditional financing methods.

"We see these responses as a reflection of today's low interest rate environment, a high degree of sales activity and flexibility of credit terms," said David S. Bagatelle, President of NY Metro Markets for Sterling National Bank. "New York City did not experience the same degree of upheaval as most parts of the country during the recent recession, so it remains an attractive market for both U.S. and international investors. As an industry, we need to remain creative in the financing solutions we provide to keep this optimism going."

The survey asked respondents to identify trends, challenges and opportunities in securing financing and raising capital across the real estate sector in the greater New York City area.

Key findings include:

  • Of the respondents who work in the real estate industry, 48 percent indicated they are "somewhat frustrated" with their current options for raising capital and two percent are "very frustrated." 21 percent of respondents expressed no frustration.
  • The largest primary source for capital funding among all respondents is "private equity" (35 percent), closely followed by "banks" (25 percent) and "investment firms" (10 percent). Other financing sources include "specialty lending" (13 percent) and a blend of various options. 
  • The two biggest financial challenges in the New York real estate market are "zoning issues/government" (44 percent) and "competition among developers" (27 percent). "Competition from other geographic markets" (10 percent) and "vacancy rates" (8 percent) were two of the least commonly cited challenges.

The first-time survey canvassed industry professionals in attendance at Crain's New York Business' recent Real Estate Conference. The theme of the June 17 event, which brought together more than 200 New York area real estate executives and service providers, was "What's Really Driving the Market." Survey respondents included developers, real estate management professionals, investors, service providers, government agencies, engineers, brokers, and real estate attorneys.

"In an environment of easy terms, credit-worthy clients need to consider the value of the relationship they have with their financial institution and their financial partners' real estate acumen," added Vinny DeLucia, President of the Hudson Valley Market for Sterling National Bank. "As for zoning issues and other frustrations the survey uncovered, we feel strongly that banks need to support their clients' financing needs by taking a holistic approach to their ability to repay and offering a wider variety of specialty solutions. Sometimes financing a project means looking past a particular property and considering a client's global cash flow generating capabilities."

For additional details on the survey or insights from Sterling experts, please contact Erin Silvetti at [email protected].

About Sterling National Bank

Sterling National Bank, the principal subsidiary of Sterling Bancorp, specializes in the delivery of service and solutions to business owners, their families, and consumers in communities within the greater New York City area through teams of dedicated and experienced relationship managers. Sterling National Bank offers a complete line of commercial, business, and consumer banking products and services. For more information, visit www.snb.com.

Forward-Looking Statements

This release may contain "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements may concern Sterling's current expectations about its future results, plans, operations and prospects and are subject to numerous assumptions, risks and uncertainties, including inflation; the effects of, and changes in, trade; changes in asset quality and credit risk; introduction, withdrawal, success and timing of business initiatives; capital management activities; customer disintermediation; and the success of Sterling at managing these risks. Other factors that could cause Sterling's actual results to differ from those indicated in forward-looking statements are included in the "Risk Factors" section of Sterling's securities filings with the Securities and Exchange Commission. The forward-looking statements included herein are only made as of the date hereof, and Sterling specifically disclaims any obligation to update these statements in the future.

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