Tags: Commercial | real | estate | loans

Banks' Commercial Real Estate Loans on the Upswing

By    |   Thursday, 17 October 2013 09:40 AM

Banks' commercial real estate lending is emerging from a three-year slump amid a recovery in real estate prices and credit quality, The Wall Street Journal reports.

The amount of U.S. banks' commercial real estate loans rose 3.3 percent in the year ended June 30, to $991.2 billion, according to research firm SNL Financial, according to The Journal.

The loans increased 2.4 percent last year, after plunging 25 percent from 2008 to 2011, in the wake of the financial crisis.

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"More banks are now on the offense, not on defense anymore, when it comes to commercial real estate," Anthony Polini, a bank analyst with Raymond James Financial, tells The Journal.

JPMorgan Chase's commercial real estate loans outstanding rose to $61.5 billion in the third quarter, up 12 percent from a year earlier.

"The commercial real estate business continues to grow strongly," JPMorgan Chief Financial Officer Marianne Lake said in a conference call, according to The Journal.

To be sure, the recovery in lending is concentrated largely in apartment projects, so if it doesn't spread to other sectors, it may not last long.

Kevin Barker, an analyst with Compass Point Research & Trading, tells The Journal, "To the extent that the banks can take advantage, it could be a tailwind to earnings."

Meanwhile, foreign demand is helping to boost prices for commercial properties, especially in the country's biggest cities.

"The amount of capital that is coming from foreign investors in the U.S. is going to accelerate pretty dramatically," Mark Gibson, executive managing director of HFF, a real estate investment bank, told a meeting of real estate executives, The Dallas Morning News reports.

Most of the big bank lenders "have worked through all their [problem properties] for the most part," Gibson noted. "They are on offense instead of defense — they are deploying capital into real estate."

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Related Stories:

JPMorgan: Banks Face Big Demand for Commercial Property Loans

Fed Survey: Banks Loosen Up on Lending for Homes, Businesses

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Banks' commercial real estate lending is emerging from a three-year slump amid a recovery in real estate prices and credit quality, The Wall Street Journal reports.
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2013-40-17
Thursday, 17 October 2013 09:40 AM
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