Risky or Not, Lenders Slowly Opening Vaults to CRE Lending Again
This article addressed the issues with loaning over the past year and how banks over the past few months have started lending again for the purpose of loan renewals and commercial real estate (CRE) lending. The total new CRE commitments increased 157% in December from the previous month. According to findings from the annual 2010 Lenders' Production Expectations Survey, which is produced by Jones Lang LaSalle, bankers are predicting that loan production will increase in 2010. Lenders are saying they'll be giving borrowers 24+ month extensions in order to avoid foreclosure on well-located, high quality assets. This is because about $1 Trillion worth of CRE's are going to reach maturity between now and 2013. There is also going to be a shift in the number of lenders willing to lend greater sums toward single-asset acquisitions. At the conclusion of the article it stated that the bid-ask spread between buyer and seller is narrowing, and in many cases might reach equilibrium. This balance between the buyer and the seller should be just what the lenders need to bring large and small business loans to the market.
I think the news from this article is very significant for the hospitality industry as a whole. Previous hospitality business's who have received CRE's have had to foreclose on their loan because of the poor state the economy has been in over the past year. The fact that banks are getting back in to loan renewals and CRE lending is good news. Hospitality people who want to apply for a loan to open a new business will have a better chance of being able to do so. Also business's who have already received loans will be able to not only extend the loan but restructure it in order to avoid foreclosure. I think this is a step in the right direction towards helping our economy pick up and keep the hospitality business's that are already around afloat.
Source: CoStar.com
