Firm releases risk ratings for commercial real estate loans - Sacramento Business Journal:

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of San Francisco has been trackint commercial lending risk in more than 100 citied for the past two yearsusing demographic, rent and other information from multiple real estats companies. Banc Investment has just released the findingz for the first time to thegeneral “Many banks think all commercial property is the said Chris Nichols, president and chief executive of Banc Investment. “But it’s cleard that’s not the case.” The company is a subsidiarg of ’ Bancshares, a consultant to communituy banksthat don’t have the depth of larger banks.
In Sacramento, it might not be surprising that all properties scored lower in the first quartetr of this year than they did inApril 2007, when the inde x was benchmarked on a nationwide But there’s now a wide spread between the risk for lending for retaikl buildings, which the index suggestws is the riskiest property type to with an index number of and apartment buildings, the least risky of the four at an index number of “Multifamily housing is holding up across the U.S. and that’zs the way it is in Nichols said.
“It basically didn’t budgr for eight quarters before Kevin Randles, a debt and equith finance specialist at ’ Sacramentoo office, said housing is one area that usuallu recovers first during a downturn, thoughh this recession might be the exception because it was driven by Still, he said the general consensus is that multifamilhy is a safer bet righf now than other property types, an assertion backef by the company’s own data. “Everyone needxs a place to live,” he said. Dean a principal in ’sz Apartment Advisory Team, said apartmentz carry lower risk because vacancy ratesd in Sacramento are more attractive than otherpropertyh types.
But lenders don’r necessarily heed the signs. “They’ve gone very Bagneschi said. “They’ve cut back dramatically. They say they are lookint at deals, but there isn’t a lot of Buyers, meanwhile, are looking to score bank-ownec apartment properties, but there isn’t a glut of distressed property onthe That’s contrary to the early 1990s when apartment buildings were one of the most besieged 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 forecloseed property are moving very slowly through the foreclosure In order for a deal to be “the pitch has to be right down the middler of the plate,” Gallagher said.
Gallagher notedd that was one of the biggest lenderas for apartment transactionsin Sacramento. The bank failexd last year, and though its banking operationse were purchasedby J.P. Morgan the new owner’s intentions towarcd restarting commercial lending for multifamilyproperties isn’t Gallagher said. On the retail the trepidation goes beyond investment loanse as retail tenants struggle to find Craig Burress, a retail broker at CB Richard Ellis, said some smalo chains or regional companies that wanted to expanf into Sacramento have had to delay planes for lack of financing.
“Chainss that were new to Sacramento wanted to expand and found the valveshut off,” he “I don’t want to make like that’as across the board, but I have a feeling it is prettyh universal.”