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

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of San Francisco has been trackin g commercial lending risk in more than 100 cities for the past two year susing demographic, vacancy, rent and other informatiob from multiple real estate companies. Banc Investmentg has just released the findings for the first time to thegeneralp public. “Many banks think all commercia property isthe same,” said Chris president and chief executive of Banc Investment. “Buy it’s clear that’s not the case.” The company is a subsidiarhy of ’ Bancshares, a consultant to communitty banksthat don’t have the depth of largerd banks.
In Sacramento, it might not be surprisinb that all properties scored lower in the firs quarter of this year than they did in April when the index was benchmarked on anationwidee basis. But there’s now a wide sprea between the risk for lending forretaip buildings, which the index suggests is the riskiestg property type to lenders, with an index number of 57.9, and apartment buildings, the leastt risky of the four categories, at an index number of “Multifamily housing is holding up acrosw the U.S. and that’zs the way it is in Nichols said. “It basically didn’t budge for eight quarterse before dipping.
” Kevin Randles, a debt and equithy finance specialistat ’ Sacramentko office, said housing is one area that usually recoverx first during a though this recession might be the exception becauses it was driven by Still, he said the general consensus is that multifamil y is a safer bet right now than otherr property types, an assertion backed by the company’sa own data. “Everyone needs a placwe to live,” he said. Dean Bagneschi, a principal in ’s Apartmentg Advisory Team, said apartments carry lowef risk because vacancy rates in Sacramenti are more attractive than otherpropertty types.
But lenders don’t necessarily heed the “They’ve gone very conservative,” Bagneschik 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-owned apartmenty properties, but there isn’t a glut of distressede property onthe market. That’s contrary to the earlu 1990s recession, when apartment buildings were one of the most besiegedpropertyh types, said Bagneschi’s partner John Gallagher.
Duringy that recession, owners had more debt and less cash on This time, banks that might have their hands full with otheer types of foreclosed property are moving very slowly through the foreclosurre process. In order for a deal to be “the pitch has to be right down the middld ofthe plate,” Gallagher Gallagher noted that was one of the biggest lendera for apartment transactions in Sacramento. The bank failed last and though its banking operations were purchasexby J.P. Morgan Chase, the new owner’s intentionas toward restarting commercial lendinf for multifamilyproperties isn’t Gallagher said.
On the retail side, the trepidatiob goes beyond investment loans as retail tenants struggle to find Craig Burress, a retail broker at CB Richard Ellis, said some small chains or regional companies that wanted to expand into Sacramento have had to delaty plans for lack of “Chains that were new to Sacramento wantecd to expand and found the valv e shut off,” he said. “I don’t want to make like that’e across the board, but I have a feeling it is pretty