Michael Stoler -- Money ready to jump
After staying on the sidelines, banks and others ready to lend for commercial deals July 01, 2010 07:00AM By Michael Stoler
Richard Coppola, managing director of TIAA-CREF, complained, "the phones are not ringing; we are not seeing enough transactions." That's a problem because the insurance giant hopes to increase loan production by at least 50 to 75 percent this year nationwide.
Even investment banks appear ready to dive back into real estate.
JPMorgan, Deutsche Bank, Goldman Sachs and RBS Greenwich have returned to provide commercial mortgage backed securities financing. Michael Sarkozi, managing director of JPMorgan, said, "We are ramped up to provide billions of dollars of financing this year."
In June, JPMorgan announced that it planned to issue a $716 million CMBS offering, the second CMBS deal of 2010. According to the presale report, the transaction covers 36 loans secured by 96 commercial properties.
"Nine months ago, we would not entertain financing for a hotel, yet today we are looking to loan up to $2 billion for a portfolio of full-service, established hotels," said Sarkozi.
What's more, today's loans are coming with attractive rates. The best borrowers with low leverage can obtain mortgage loans of five, seven and even 10 years.
It was only 12 months ago that Prudential provided a loan to the Cross County Shopping Center in Westchester County at a rate of 7.5 percent. Today, rates can be as low as 4.5 percent on a five-year loan, 5 percent for a seven-year loan, and 5.05 percent for a 10-year loan.
The preferred asset classes for loans are office buildings in major money-center cities, well-established retail malls, industrial properties and multifamily buildings. Certain insurance companies might even entertain a loan for an established full-service, four- or five-star hotel.
George Klett, senior executive vice president and chairman of the real estate committee at Signature Bank, said that later in 2010, after two years' absence from the market, he plans to provide construction financing. The president of the New York and Long Island Region for M & T, Gino Martocci, said, "We never stopped lending for construction loans, and we expect to provide financing for both rental and condominium developments this year."
With the hotel industry bouncing back this year, lenders including Crédit Agricole, M & T and Wells Fargo have an interest in providing construction and permanent financing for this asset class. Certain lenders, including Wells Fargo and Crédit Agricole, so want to entertain hotel and gaming loans that they have separate teams of bankers specializing in this area.
Richard Born, principal of BD Hotels, noted that he had purchased two New York properties that he planned to convert into hotels, and has a number of lenders actively interested in providing financing. Lenders that separately noted they were interested in providing financing for hotels included Ladder Capital and Apollo Commercial Real Estate Finance. Earlier this year, Apollo provided nonrecourse, five-year fixed-rate financing of $32 million for the Hilton Garden Inn Tribeca.
Needless to say, banks continue to be bullish on residential rental properties. New York Community, Dime Savings Bank of Williamsburgh, M & T, Capital One, Sovereign and Investors Savings are banks leading the pack in this arena.
Pricing for low-leverage transactions, for terms of up to ten years, is available at rates below 5 percent.
All I can say is, it is not a dream, but a reality: The banks are now open for business.
The Real Deal reserves the right to delete any comment it finds to be rude, obscene, racist, sexist, bigoted, irrelevant or repetitive, as well as inappropriate comments about anyone's personal appearance or advertisements. The Real Deal does not endorse any comments posted on its Web site nor does it verify the veracity of comments or the identity of posters.
Comments
Anonymous
The banks have always been open for business you reject with the exception for construction. What you failed to mention is decreased values, increased DSC, increased vacancy rates, etc, etc...which make many loans untouchable without additional equity.
Comment #1 Posted By: Anonymous 07/20/10