Small banks shrinking away from commercial real estate

As regulators are closing in, lenders are backing off

TRD MIAMI /
Oct.October 04, 2016 12:45 PM

From the New York websiteSmall banks are retreating from financing commercial real estate as federal regulators ramp up scrutiny of such lending.

The Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency have repeatedly issued warnings to commercial real estate lenders, urging banks to strengthen loan terms. As a result, smaller banks are selling off loans and hesitant to issue new ones, leaving private equity funds and other institutional lenders to fill in the gaps, the New York Times reported. JLL’s Aaron Appel told the Times that there’s less competition now for $5 million to $10 million commercial property deals, especially for loans involving construction or redevelopment projects.

Large banks are also pulling back, since they can’t count on selling off portions of large loans to smaller banks. Instead, Michael Gigliotti, a broker for HFF, told the newspaper, property owners are turning to foreign banks. According to the Federal Reserve, American offices of foreign banks now have $51.8 billion in commercial mortgage holdings, a 56 percent increase from last year. For example, a group of foreign banks — led by Bank of China and Deutsche Bank — provided a $1.5 billion construction loan to Related Cos. and Oxford Properties Group for the Shops & Restaurants at Hudson Yards.

In some cases, banks are also teaming up with mezzanine lenders to speed up and simplify deals.

Arkansas-based Bank of the Ozarks seems to be one smaller bank that’s bucking the trend. As one of the most active construction lenders, its New York City real estate loans swelled to $1.9 billion in the second quarter from $1.6 billion at the end of 2015.  [NYT]Kathryn Brenzel


Related Articles

arrow_forward_ios
2965 West Corporate Lakes Boulevard and Black Creek Group CEO Raj Dhanda (Credit: Google Maps, Blue Vault)

TIAA sells Weston warehouse for $33M

TIAA sells Weston warehouse for $33M
State report finds open gas valve fueled building explosion at Plantation shopping center

State report finds open gas valve fueled building explosion at Plantation shopping center

State report finds open gas valve fueled building explosion at Plantation shopping center
Bayside Marketplace is planning another high-rise entertainment venue with a view

Bayside Marketplace is planning another high-rise entertainment venue with a view

Bayside Marketplace is planning another high-rise entertainment venue with a view
Construction of downtown Hollywood high-rise may start soon

Construction of downtown Hollywood high-rise may start soon

Construction of downtown Hollywood high-rise may start soon
South Florida firm, partner acquire Tampa office building for $29.4M

South Florida firm, partner acquire Tampa office building for $29.4M

South Florida firm, partner acquire Tampa office building for $29.4M
Developer borrows $105M, breaks ground for mixed-use Flagler Village project

Developer borrows $105M, breaks ground for mixed-use Flagler Village project

Developer borrows $105M, breaks ground for mixed-use Flagler Village project
Moishe Mana plans mixed-use project with logistics theme next to airport in Panama

Moishe Mana plans mixed-use project with logistics theme next to airport in Panama

Moishe Mana plans mixed-use project with logistics theme next to airport in Panama
Power restored after blackout envelopes West Side of Manhattan

Power restored after blackout envelopes West Side of Manhattan

Power restored after blackout envelopes West Side of Manhattan
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...