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BANK SURVEY FINDS STRONG BORROWER DEMAND AND TIGHTER CREDIT STANDARDS FOR COMMERCIAL REAL ESTATE
SAN FRANCISCO, Calif. - April 7, 2003 /Send2Press/ -- Banks still offer a ready
supply of capital to finance commercial real estate despite tighter credit
conditions and expectations of uneven property sector performance, according to
a newly-released survey. The third "Bridger Semi-Annual Survey of Lender's
Commercial Real Estate Perspectives" was completed in March by Bridger
Commercial Funding, and reflects the opinions of 150 senior loan officers at 119
banks throughout the U.S.
Over 85% of banks represented in the survey foresee their 2003 commercial real
estate loan volume equal to or greater than their 2002 volume, and most of them
are selectively building outstandings. Growth in commercial mortgage portfolios
in 2003 is projected despite tightening credit standards reported over the past
120 days, with just over half (51%) the banks reporting "somewhat tighter"
underwriting and 37% reporting unchanged standards.
Borrower demand also remains reasonably strong, according to the bankers
surveyed. Almost 75% described borrower demand for commercial real estate loans
as either "somewhat strong" or "moderate." With interest rates at historical
lows, 83% of bankers surveyed reported "very strong" or "somewhat strong"
borrower demand for long-term, fixed rate financing. Borrower demand for
short-term floating rate debt seemed to ebb, with 63% of respondents reporting
"moderate" or "somewhat strong" interest.
Fully two-thirds of bankers surveyed expect commercial real estate overall
performance to remain strong over the next 12 months, reflecting moderate
delinquency levels and limited foreclosures. However, opinions about sector
performance varied. Multifamily property performance was projected as the
strongest sector by 84% of respondents, with low to moderate delinquencies
anticipated. Office, retail, and warehouse/industrial property performance
should remain reasonably strong, approximately 90% of bankers observed, although
they anticipate higher rates of delinquencies and foreclosures than in the
multifamily sector. Finally, lodging continues to be viewed as the most
vulnerable property sector, with over 80% of bankers surveyed expecting weak
performance to continue through 2003.
"Our survey results suggest that bankers expect commercial real estate to
continue to be a bright spot in their loan portfolios," said Peter Grabell,
Senior Vice President of Bridger. Competition should remain keen among banks
seeking to make new commercial real estate loans, notwithstanding current
economic weakness," Grabell observed. "Bridger's survey results point to a
current interest rate environment that could represent a once-in-a-generation
opportunity for borrowers to lock in long-term financing at unparalleled low
rates. Banks and capital markets sources clearly have no shortage of money to
lend," he stated.
The complete results of the survey can be found at:
Bridger Commercial Funding (www.BridgerFunding.com) is the leading commercial
real estate capital markets resource serving the U.S. banking industry, with
over 900 bank relationships nationwide. Bridger's innovative products and
technology applications help banks maximize their risk-adjusted returns by
accessing the secondary mortgage market. Bridger's commercial mortgage-backed
securities (CMBS) loan origination program enables banks to boost financial
performance by generating substantial fee income while retaining and enhancing
borrower relationships. In addition, Bridger's BankXchange[tm] program optimizes
banks' loan portfolio risk profiles and returns by facilitating purchases and
sales of loan portfolios, whole loans and participations. Through a growing
network of over 3,100 commercial loan officers nationwide, Bridger is the
commercial real estate banking industry's premier provider of secondary market
origination and trading solutions.
Source of news:
Bridger Commercial Funding
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