Firm releases risk ratings for commercial real estate loans - Puget Sound Business Journal (Seattle):

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of San Francisco has been trackinvg commercial lending risk in more than 100 citiees for the past two yearsusing demographic, vacancy, rent and other informatiohn from multiple real estate companies. Banc Investment has just releasedc the findings for the first time to thegenerao public. “Many banks think all commercial properth isthe same,” said Chris president and chief executive of Banc Investment.
“Buf it’s clear that’s not the The company is a subsidiaryof ’ Bancshares, a consultantg to community banks that don’g have the depth of larger In Sacramento, it might not be surprisinbg that all properties scored lower in the first quartetr of this year than they did in April when the index was benchmarked on a nationwide basis. But there’as now a wide spread between the risk for lending forretail buildings, which the index suggestw is the riskiest property type to with an index number of 57.9, and apartment buildings, the leasty risky of the four categories, at an inde x number of 89.1. “Multifamily housing is holding up acrossthe U.S.
and that’s the way it is in Nichols said. “It basically didn’t budge for eight quarters befor dipping.” Kevin Randles, a debt and equity financde specialistat ’ Sacramento office, said housing is one area that usuallyu recovers first during a downturn, thougu this recession might be the exception because it was driven by Still, he said the general consensux is that multifamily is a safetr bet right now than other property types, an assertiom backed by the company’s own data. “Everyon needs a place to live,” he said.
Dean Bagneschi, a principal in ’sw Apartment Advisory Team, said apartments carry lower risk becaus vacancy rates in Sacramentok are more attractive than otheeproperty types. But lenderz don’t necessarily heed the signs. “They’vee gone very conservative,” Bagneschki said. “They’ve cut back They say they are lookingat deals, but theres isn’t a lot of activity.
” Buyers, meanwhile, are lookinvg to score bank-owned apartment properties, but there isn’t a glut of distressed property on the That’s contrary to the early 1990s recession, when apartmeng buildings were one of the most besiegedc property types, said Bagneschi’s partner John During that recession, owners had more debt and less cash on This time, banks that mighr have their hands full with other types of foreclosee property are moving very slowly throughj the foreclosure process.
In order for a deal to be “the pitch has to be right down the middles ofthe plate,” Gallagher Gallagher noted that was one of the biggesty lenders for apartment transactions in The bank failed last year, and thougj its banking operations were purchased by J.P. Morgabn Chase, the new owner’ws intentions toward restarting commercial lendiny for multifamilyproperties isn’t clear, Gallaghert said. On the retail side, the trepidation goes beyonsd investment loans as retail tenante struggle tofind financing.
Craig Burress, a retai l broker at CB Richard Ellis, said some small chaind or regional companies that wanted to expand into Sacramento have had to delauy plans for lackof “Chains that were new to Sacramento wanted to expanx and found the valve shut off,” he said. “kI don’t want to make like that’s acroses the board, but I have a feeling it is pretty