Banks Doing Their Job…and Lending!?!?!

I came across a very interesting article from CoStar that emphasized that banks are finally beginning to lend in the commercial real estate market. I am unsure if it is due to the fact that the Greek Crisis might be coming to an end (knock on wood) or the fact that the long term yields will remain compressed (compliments of Bernanke) till 2014. This has forced many banks to steer away from lending money to institutions who can borrow at Libor and in turn churn the money at sub 4% interest rate…which is low by any standard but much higher than Libor. This has created a turn back to real estate. The banks went as far to say that the real estate sector can be viewed as an area to bolster revenue and earnings…which is a complete 180 from a year ago. Likewise, the banks are forcing very low LTV’s on the borrowers which creates an obvious and easy loan to underwrite….$1,000,000 asset with a $300,000 loan is about as most risk averse as it gets. It is a slow process but it is essential to have baby steps on the road to recovery. Have a great weekend and feel free to ask any questions.

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