Banks issuing fewer commercial real estate loans
Commercial real estate developers in Florida may have to get creative while looking for financing as banks are shying away from commercial real estate lending. Both small and large banks have been selling off the loans that they already have and issuing fewer new loans. Now, there are more opportunities for private equity funds to take on commercial real estate loans.
The changes in banks’ lending practices are a response to warnings that were issued by the Office of the Compotroller of the Currency and the Federal Deposit Insurance Corporation. The federal regulators warned banks to strengthen their loan terms before issuing any new commercial real estate loans.
With small banks pulling back from commercial real estate lending, big banks cannot sell off the loans that they have to smaller banks. Small banks are selling many of their loans to institutional lenders. Competition for multi-million dollar commercial property deals is now greatly diminished, especially deals that involve construction or redevelopment. In addition to institutional lenders, commercial real estate developers are turning to foreign banks such as Deutsche Bank and Bank of China to secure funding for new projects.
Changes in the economy can affect many aspects of the commercial real estate business such as property values and bank loan terms. A commercial real estate law attorney can provide advice to a developer about how current economic trends may impact their existing projects and any future projects that they have planned. If developers are experiencing challenges funding a new project, an attorney may be able to help them to work with lenders.