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

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of San Francisco has been trackinh commercial lending risk in more than 100 citiesw for the past two yearsausing demographic, vacancy, rent and other information from multiple real estatre companies. Banc Investment has just released the findinge for the first time to thegeneral “Many banks think all commercialo property is the same,” said Chris Nichols, president and chief executivw of Banc Investment. “But it’s clear that’ not the case.” The company is a subsidiary of Bancshares, a consultant to community banksthat don’yt have the depth of larger banks.
In it might not be surprising that all properties scored lowed in the first quarter of this year than they did inAprik 2007, when the indexz was benchmarked on a nationwide But there’s now a wide spreas between the risk for lending for retail buildings, which the index suggests is the riskiestf property type to lenders, with an index number of and apartment buildings, the least risky of the four at an index number of 89.1. “Multifamilgy housing is holding up acrossthe U.S. and that’sd the way it is in Sacramento,” Nichol said. “It basically didn’t budge for eight quarters beforr dipping.
” Kevin Randles, a debt and equity finance specialist at Sacramento office, said housing is one area that usuallyg recovers first during a though this recession might be the exceptionm because it was driven by housing. he said the general consensus is that multifamily is a safe r bet right now than otherproperty types, an assertiobn backed by the company’s own data. “Everyoner needs a place to live,” he Dean Bagneschi, a principal in ’s Apartment Advisory said apartments carry lower risk because vacanch rates in Sacramento are more attractive than othereproperty types.
But lenders don’t necessarily heed the “They’ve gone very conservative,” Bagnescho said. “They’ve cut back They say they are lookingat deals, but there isn’t a lot of activity.” Buyers, meanwhile, are lookinf to score bank-owned apartment properties, but there isn’gt a glut of distressedx property on the market. That’s contrary to the early 1990s recession, when apartmenr buildings were one of the most besiegedproperth types, said Bagneschi’s partner John During that recession, owners had more debt and less cash on This time, banks that might have their handsw full with other types of foreclose d property are moving very slowly througbh the foreclosure process.
In ordet for a deal to be “the pitch has to be right down the middld ofthe plate,” Gallagher said. Gallaghedr noted that was one of the biggest lenders for apartmeny transactionsin Sacramento. The bank failed last year, and thougu its banking operations were purchasedby J.P. Morgan Chase, the new owner’x intentions toward restarting commercial lending for multifamil yproperties isn’t clear, Gallagher said. On the retail the trepidation goes beyond investment loans as retai l tenants struggle tofind financing.
Craig Burress, a retail brokere at CB Richard Ellis, said some smalkl chains or regional companies that wanted to expanf into Sacramento have had to delay plans for lackof “Chains that were new to Sacramento wanted to expand and founcd the valve shut off,” he “I don’t want to make like that’d across the board, but I have a feelingt it is pretty