Commercial real estate takes a nosedive

[Imhotep]

Here a interesting article which I'll share for discussion...........

With the credit crunch, some are finding a hard time getting loans. Banks have stricter rules when it comes to lending money, especially for folks buying real estate. News 3's Marie Mortere takes a look at the obstacles and what you now need to overcome them.

The fall on Wall Street means more scrutiny from lenders - hurdles buyers didn't pay attention to before the mortgage meltdown. At the Las Vegas Chamber of Commerce's commercial real estate seminar, folks learned that, like housing, commercial real estate has hit a slump, too.
Just as banks are lending less money, there is an oversupply of property to purchase.

But according to Grub and Ellis, North Las Vegas has the worst vacancy rate despite rent being among the cheapest.
Richard Luciani is part of a team of experts put together by the Las Vegas Chamber of Commerce. Their focus is to figure out how to get through this credit crunch when cash is needed for commercial real estate.
Luciani says, "The whole financial institution is nervous about lending money, be it commercial, from the spillover of the residential situation."
But experts say buying shouldn't be discouraged, especially if you have proof that you can return the amount of money you receive such as a history of borrowing money, repaying borrowed money on time, and not having any bankruptices.

"Real estate has performed in the long-term, despite what blips you have in the economy," says Luciani.

A bit of hope, despite what hurdles folks may face.
Financial experts say banks won't loosen their lending practices until the housing market vastly improves. It's difficult to give a legitimate time frame, but experts say things could change with a year's time.

kvbc.com/Global/story

Any of your guys have problems get loans?

 

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[RealOG]

There is still money out there, but the expectations are higher. Its tougher to get money on lower-end projects and damn near impossible to go off anything other than actual performance.

The money is still available, you just have to work harder for it.

SteveO should probably weigh in. He had insight on some of the larger sized loans.

RealOG

 

[Sid23]

We are looking for acquisition loans of $10-25mm and development loans of $40-500mm and finding very little availability.

My firm has 30 year industry vets who have developed over a billion in new development projects. If anyone is getting "good" loans right now, not sure who they are if we are not.

 

[Imhotep]

There is still money out there, but the expectations are higher. Its tougher to get money on lower-end projects and damn near impossible to go off anything other than actual performance.

The money is still available, you just have to work harder for it.

SteveO should probably weigh in. He had insight on some of the larger sized loans.

RealOG

What about "Seller financing"??

 

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[NotesRog]

We are looking for acquisition loans of $10-25mm and development loans of $40-500mm and finding very little availability.

My firm has 30 year industry vets who have developed over a billion in new development projects. If anyone is getting "good" loans right now, not sure who they are if we are not.

With Wall St gone from the CMBS world, life co's and commercial banks have moved into front and center. Life co's only have so much $ allocated to RE mortgages each year and many have already loaned out their allocations for 2008. Those still in the market have limited the loan sizes to remain in the market.

Even then, underwriting parameters are generally 60-65% LTV maximum on actual historic and current operating data. Even then, these lenders still want to ensure the borrower retains some equity in the deal, even if the property has been owned for over 5 years.

This week, many still in the market have sidelined themselves due to the volatility. Those that haven't, raised spreads dramatically. I don't think I could have contemplated apartment loans in the 300-325 range with leverage in the 60%'s.

Roger

 

[glendee]

I have been putting my Multi-Family people into the 92.5% (with seller 7.5% 2nd) acquisition and the 90% loan to cost program. It's non-recourse, 35 and 40yr am. With the ability to finance the 10% development fee they are loving the low up front fees. It takes a minute to get it all set up but so far so good. The way the market is you have to take money where it's flowing so I'm encouraging everyone in my sphere to play the hand that's dealt us, stop griping (or is it whining) and get it done.