Shopping Centers Today: International Council of Shopping Centers (ICSC) / November 12th, 2015
Shopping Centers Today: International Council of Shopping Centers(ICSC) reports: Regional and local banks are steadily increasing their market share of total lender volume, according to data from Real Capital Analytics (RCA), a commercial real estate analytics firm. Last year the regional and local bank share of commercial real estate loans was 14 percent, up from a low of only 9 percent in 2011. “While all capital sources have increased lending, the regional banks are expanding faster. Regional and local banks have a lost cost of capital and want to earn a good return on it, and commercial real estate is offering good opportunities,” says Jim Costello, Senior Vice President at RCA. Lender volume has increased throughout the market, but the regional banks have been expanding at a faster pace than other capital sectors.
Retail property lending was up the first half of the year in comparison to the first half of 2014. Following an active 2015 first quarter, the market slowed during the summer with lending for all property types, dropping by 6 percent in July and 17 percent in August in comparison to the same periods in 2014, according to Real Capital Analytics.
Prior to the global financial crisis, commercial mortgage backed securities (CMBS) were the main lending source for retail property owners. With CMBS’s become more costly, some borrowers are beginning to look to regional and local banks for their loans. Typically regional banks invest in multifamily properties. However, with yields on multifamily properties diminishing, some banks are diversifying their portfolio with retail properties.
Regional and local banks have average loans sizes much smaller than other lenders. Last year insurance companies averaged $27.1 million, CMBS averaged $14.3 million, and regional and local banks averaged $5.4 million, according to RCA.
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