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

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of San Francisco has been tracking commercia l lending risk in more than 100 cities for the past two yearssusing demographic, vacancy, rent and other information from multiples real estate companies. Banc Investment has just releasedc the findings for the first time to thegeneral “Many banks think all commercial property is the same,” said Chris Nichols, president and chief executive of Banc Investment. “But it’d clear that’s not the case.” The company is a subsidiary of ’ Bancshares, a consultant to community banksthat don’tr have the depth of larged banks.
In Sacramento, it might not be surprisinv that all properties scored lower in the firsrt quarter of this year than they did in April when the index was benchmarked on a nationwide But there’s now a wide spreas between the risk for lending for retaiol buildings, which the index suggestxs is the riskiest property type to lenders, with an index number of 57.9, and apartment the least risky of the four categories, at an indesx number of 89.1. “Multifamiluy housing is holding up acrossthe U.S. and that’sz the way it is in Sacramento,” Nichols said.
“It basically didn’t budg e for eight quarters before Kevin Randles, a debt and equity finance specialist at Sacramento office, said housing is one area that usuallg recovers first during a downturn, though this recessiobn might be the exception because it was drivejn by housing. Still, he said the general consensus is that multifamilyh is a safer bet righy now than otherproperth types, an assertion backed by the company’zs own data. “Everyone needs a place to he said.
Dean Bagneschi, a principal in ’sw Apartment Advisory Team, said apartmentsz carry lower risk because vacancy rates in Sacramento are more attractive than other property Butlenders don’t necessarily heed the signs. “They’v gone very conservative,” Bagneschi said. “They’ve cut back dramatically. They say they are looking at deals, but theres isn’t a lot of activity.
” Buyers, are looking to score bank-owned apartmentt properties, but there isn’t a glut of distressef property onthe That’s contrary to the early 1990e recession, when apartment buildings were one of the most besiegexd property types, said Bagneschi’s partner John Gallagher. During that owners had more debt and less cash on This time, banks that mighyt have their hands full with other types of foreclosede property are moving very slowly through the foreclosured process. In order for a deal to be “the pitch has to be righf down the middle ofthe plate,” Gallagherd said.
Gallagher noted that was one of the biggesy lenders for apartment transactionsin Sacramento. The bank failed last year, and though its banking operationds were purchasedby J.P. Morgan Chase, the new owner’s intentionds toward restarting commercial lendingf for multifamilyproperties isn’t clear, Gallaghee said. On the retail side, the trepidatioj goes beyond investment loans as retail tenants struggle tofind financing. Craig Burress, a retaip broker at CB Richard Ellis, said some smalkl chains or regional companies that wanted to expanfd into Sacramento have had to delay plans for lackof financing.
“Chainsa that were new to Sacramento wanted to expand and foundd the valveshut off,” he said. “uI don’t want to make like that’s acrossx the board, but I have a feeling it is prettyg universal.”