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The Real Deal Los Angeles

Banks lend aggressively on CRE despite downturn fears

Loan delinquency rate at lowest level in a decade
April 11, 2017 10:30AM

9 West 57th Street

From TRD New York: Banks are aggressively lending on commercial properties even as developers and equity investors are starting to pull back amid fears of a downturn.

“It’s tougher right now,” Craig Bender of ING Group’s U.S. real estate lending arm told the Wall Street Journal. “The banks are hungry. The life insurance companies are hungry.”

Total U.S. commercial real estate lending volume decreased slightly to $491 billion in 2016 — down 3 percent from 2015, according to the Mortgage Bankers Association. But that’s mostly because there are fewer acquisitions to finance as investors become more cautious.

Banks, in contrast, are in many cases still bullish. Wells Fargo, for example, plans to lend around the same volume in 2017 as it did in 2016 ($30 billion). Still, its head of commercial real estate Mark Myers said the bank is “more cautious” than a year ago.

Lending bulls point to the loan delinquency rate, which is at the lowest level in more than a decade. A mere 0.59 percent of loans held by banks and thrift associations were delinquent for more than 90 days according to the MBA, compared to 4.21 percent in 2010. [WSJ]Konrad Putzier