Impact of Tightened Lending on CRE
THE IMPACT OF SHIFTING LENDING STANDARDS ON CRE MARKETS
Lending Is Active, But Standards Are Changing
Lending is generally available for most CRE assets, but the cost of borrowing is heightened
CRE Loan-To-Value has dropped to the 50%-60% range, which is impacting transaction activity
CRE Performance Is Strong
Typically, property distress and missed payments are the primary cause for tightening lending standards
But as of 2Q, the CRE delinquency rate is still 0.84%, well below the nearly 9% level recorded in 2010
Fundamentals Are Sound, So Why Is Financing Difficult?
Coming off major bank runs this spring; smaller banks have been trying to create additional liquidly in case confidence falls and sparks withdrawals
The tightening being tied to banking risk, rather than CRE performance risk, is a positive sign for where CRE lending is headed moving forward
*Lending Standards through 4Q
Sources: Marcus & Millichap Research Services, Real Capital Analytics
