Fergal Woods
Fergal Woods
Managing Partner, Finance Boston
Age: 49
Industry experience: 29 years
As regional banks get choosier about their lending commitments, developers need to widen their contact lists in seeking financing for new projects. Fergal Woods’ Boston-based firm connects developers looking to get in on the ground floor of the next growth clusters, whether it’s financing for predevelopment costs, acquisitions or condo conversions. Clients include Boston-based developer RISE, which received $5 million in mezzanine financing for preconstruction associated with its proposed mixed-use development in Sullivan Square, and Core Investments, developer of the proposed On the Dot project in South Boston. Woods began investing in apartment buildings himself after emigrating from Ireland in 1994 to pursue his MBA at Boston College’s Carroll School of Management. He founded Finance Boston in 2004, following roles at U.S. Trust and Century Bank.
Q: How are the regional banking sector’s troubles affecting financing for multifamily projects?
A: It’s noticeable, but nothing like 2008. Our volume this year so far is the same or above last year, and most of what we do is with regional banks. The lower-tier banks are the most active. The large regional banks had been conservative all along.
Q: What does your current book of business tell you about the best prospects for development in and around Boston?
A: Our specialty is getting in very early. We tend to work with developers who are doing cutting-edge stuff. If you’re trying to buy a piece of property in Somerville or South Boston or Cambridge, that is going to take two or three years to get entitled. It could be vacant land or a warehouse or an industrial building. We can put together a capital stack that minimizes the developer’s cash in the deal, and then enables the developer to pull cash out or recapitalize the project at every stage. It could be an initial purchase, and then there could be additional parcels added to the assemblage. Sometimes these projects need two, three, four or even more capitalizations. And that’s what we are the best at. We work with some large land bankers in the city that try to keep what they do below the radar.
Q: How big of an impact are interest rate hikes having on development activity?
A: The current environment hasn’t really affected our business from a volume perspective. We focus mostly on residential construction and bridge lending. There’s still a shortage of residential property in the city, and rents continue to go up. Prices for condos are pretty stable. Because of the interest rate environment, obviously we’re doing a lot less refinances. There’s going to be refinances that need to be done over the next year or three, which sometimes will be difficult, and the borrowers will need us all the more. The tighter credit gets, the more we’re needed. When things are tight, a bank that might have been bragging to their client for five to 10 years that they’re in a relationship and don’t need to work with brokers, suddenly word has come down from on high that they’re tightening their lending.
Q: How would you rate the various property sectors in terms of strength?
A: The office market is sort of getting crushed, but we’re not that exposed to it. Industrial had been hot until recently, and I’m seeing it slow down. I hear from construction companies that their pipelines are drying up, especially on the commercial side including life science. I heard from one large construction company that their pipeline was full through the end of 2025 and now it’s not full through the second end of 2023. Hopefully, that will have an impact on construction costs.
Q: Is hotel development financing showing any signs of a recovery?
A: Under $25 million, we still have some local lenders who we do business with that have an appetite. We have a client that has been buying hospitality properties up and down the coast from Cape Cod to Maine, and finding homes for all of his purchases over the past six to 12 months. But the last construction loan we did for hospitality was maybe two years ago.
Q: There’s been some criticism of Boston’s proposed inclusionary development policy changes, and predictions they would depress condominium development. Do for-sale housing projects still pencil?
A: They still make sense. I’m sort of agnostic as to whether the affordability component makes sense or not. It just drives up the cost of the market-rate units, but there’s enough people coming to the city that can afford them, I guess. We’re still seeing them pencil out in Somerville, and South Boston. There are a few projects in Brighton at the moment that pencil out. I see Brighton the way South Boston has been hot for the past 10 years, and I think Allston and Brighton could be the next growth areas in the city of Boston. We’re also seeing growth in Revere and Malden. That pocket seems to be where most of the development is going.
Q: Are clients getting more wary of investing in Boston because of the various changes in the development review process under Mayor Michelle Wu?
A: There’s fewer projects being approved, and there’s fewer going through the pipeline. I don’t know if that’s because of development sentiment about the market, or if there’s ambiguity about what can and can’t be done. Typically, developers just need to know the rules. It doesn’t matter how draconian or laissez-faire they are.
Five Books from Which Woods Learned the Most:
- “Antifragile,” by Nassim Taleb
- “When Money Dies,” by Adam Fergusson
- “The Talent Code,” by Daniel Coyle
- “Goldman Sachs,” by Lisa Endlich
- “Never Split the Difference,” by Chris Voss
