WATCH: Terra Capital CEO says commercial RE market is “much healthier” than in 2007

Bruce Batkin sees low leverage levels
September 29, 2017 12:50PM

The U.S. commercial real estate market may be slowing down, but Terra Capital Partners CEO Bruce Batkin sees little risk of a crash.

“A lot of the regulations that were put in place have in fact created a much healthier environment for commercial real estate,” he said on Bloomberg TV Thursday. “The capitalization of real estate is far more conservative than it was in 2007.”

Post-crisis banking regulations under the Dodd-Frank Act and the international Basel III framework have made it harder for banks to issue risky real estate loans, keeping a lid on debt levels. Earlier this year, some observers voiced hope — or concern, depending on one’s standpoint — that the Trump administration would roll back these regulations. That has yet to happen.

“The regulated lenders are, if anything, underinvested in real estate,” Batkin said. “Leverage levels are low, particularly with regard to construction loans.”

Fund manager Terra has financed several construction projects in New York City. Last year, the company issued a $19.1 million mezzanine loan to Cape Advisors for the condominium project 30 Warren Street in Tribeca.  [Bloomberg]Konrad Putzier