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CRE Lending Increases As More Debt Moves to Servicers. February 18, 2010

Posted by Sean Tufts in Research/Data.
Tags: , , , , ,

One of the most common comments we receive from investors is, “There isn’t any financing available!”  That has been a very true statement the past 18 months but new data from Costar suggests that the belt may be starting to loosen as banks and insurance companies get back in the business of lending.  The rules, however,  have changed.  “While liquidity within the capital markets is expected to turn from a trickle to a slow-but-steady flow in 2010, borrowers can expect the same tightened underwriting standards they experienced from life company lenders in 2009.”  LTV’s, for example, are expected to range between 50-70% for high quality assets.

The other side of the lending coin is the disposal of non-performing assets and debt.   There has been a significant increase in problem debt being addressed in the past 3 months.  Costar states, “U.S. CMBS loans are transferring to special servicing in larger batches and with increasing speed… Last month saw 248 loans totaling $4.27 billion move into special servicing. This figure is more than four times the balance that transferred in January of last year.”

Banks are continuing to consolidate and are capitalizing on the opportunity to get rid of bad loans while only realizing a portion of the actual loss (while the Fed picks up the rest via a loss-sharing agreement).  We expect lenders to use their new capital to get back in the business of lending.  This is encouraging news for investors that have been forced to kill deals because of the poor financing environment.  

Read the entire article here.



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