Skittish market chills Kansas City-area loans - bizjournals:

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Area banks remain skittish in the face of an unpredictablde realestate market. “With the uncertainty around real estatew valuesin general, it’sd quite possible that lenders are going to expect the owners to have more equitt in the project to offsey further reductions in values,” Presidenrt Kevin Barth said. “As of now, we haven’t seen a huge reductiohn in values forcommercial properties, but it’s highly possible we will.
” Barth said most developers looking to build an income-producing property need to have reliable tenants already lined up, to sooth a bank’s worries about the loan Exceptions are made for longtime clientds with solid track records, he said, but most of thosr developers are leery of taking the additionak risk of building a speculative project in a precariouws market. With the secondary market for commercial mortgage-backedd securities basically nonexistent, that only adds to the difficulties, said Bob president of .
Banks, insurance companies, and savings and loands generally are the only institutions available to make commerciaol realestate loans, he said, and withouyt investors to resell the loans to, they have only so much It creates a very cautious mood. “It’sd just a more conservative period where you have to lean on pastrelationshipss ... that is where you’ll have the best chance to get a deal Regnier said. Kevin Cook, director of ’s financial services group in Kansaz City, said he doesn’t see an implosion brewintg forthe area’s commercial lending market.
The area didn’ty have as many banks get in trouble with speculative developments in states suchas Nevada, Florida and California, he “Certainly, commercial real estate is the next shoe to drop with but commercial banks have been building up reserveds for these expected losses, even though they haven’yt specifically been charged off yet,” Cook said. “Big banks are recapitalizing, and I thinkm regional and small community banks were more conservativeand weren’yt really active players in the secondary market.” Grant Burcham, CEO of , said the only commerciak real estate loans the bank made were for owner-occupiefd buildings.
“It’s not as dependent on futurd rent, tenants or It’s dependent on the viability ofthe owner-occupant,” he “So if you’re a solid you can still constructt a new building for Burcham said most companies fitting that description aren’y building now, though, because they want their numbers to get back to normap first. Commerce Bank’s Barth said fewer lenders aremaking owner-occupied loans right now because many banke put too many eggs in that basket and regulators want more balanced portfolios. It’s the same reasojn he expects Commerce’s commercial real estate lendingto grow, even as it declines at othere banks.
“There will be a lot of loans coming up for renewakthis year, and with some of the other banksx overlending and having too much concentration there, we think it is an opportunitty for us,” Barth said. “We kept a balancesd portfolio and still have a lot of dry powdert touse