Banks may still have a lot of bad commercial loans on their books, but smart real estate professionals shouldn’t be shy about capitalizing on them, contends Gary Ralston, CCIM, CPM, CRE, of Coldwell Banker Commercial Saunders Ralston Dantzler Realty in Lakeland, Fla. Read more…
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Commercial: Improving, Although Credit Remains Issue
Multifamily is the commercial sector faring best right now. It’s™ seeing vacancies shrink and absorption improving, although rental rate gains are modest at best. The other sectors are improving a little, too. Vacancies are still heading in the wrong direction and absorption isn’™t where it could be if financing didn’™t remain so challenging to get. NAR Chief Economist Lawrence Yun thinks credit could start loosening as banks, sitting on lots of cash, feel pressure to start lending again. Yun gave his outlook last week at the NAR Conference & Expo. Access a summary and his slides.
Commercial Real Estate Largely Through the Free Fall
Regulators are keeping a close eye on bank portfolios where commercial property loans make up more than 300% of total risk-based capital, excluding loans where the borrower owns the office or plant it occupies. Some banks are having to purge commercial RE credits from their books because of various regulatory orders. It’s estimated that 20% to 40% of all U.S. banks are at or above those levels, creating opportunities for those who are below them. This article reports that there’s still room for CRE loans.
Commercial Loan Losses – Large but Bearable
Bearable — assuming banks will book the losses over time and offset them with earnings from healthier loans. But that convenient scenario may not play out for all banks, leaving investors potentially exposed to shock hits from commercial real-estate exposure. It will pay to sift through banks’ first-quarter earnings, which started to come out last week, for signs commercial real estate could yet cause unexpected pain. Read more…
