Shopping Centers Today International

DEC 2015

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

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have recovered nicely and vacancy rates finally dropped into the two- digit territory," said George Raitu, director of quantitative and commer- cial research for the National Associ- ation of Realtors, Washington, D.C. While that may be true in general, the success of regional lenders de- pends on the individual markets. "In gateway metros such as New York, retail is seen as a trophy property, and the lending sources range from sovereign wealth funds to big life insurance companies," said Raitu. "On a list of lenders for big cities, regional lenders are way down, the sixth- or seventh-busiest sources." That all changes with second- and third-tier cities. "In smaller met- ros, the number-one lenders are the smaller banks," said Raitu. "Banks are the main funding source for com- mercial real estate transactions, in- cluding retail. All other sources fall in place behind." Regional or local banks prefer re- course loans, which means that if the bank forecloses, it will go after the sponsor, the individual who signs the personal guarantee. "Our deals are recourse," said Swanson. "We closed one this year that was nonrecourse or limited recourse, but it was a very conservative loan. You start getting into 50 percent loan-to-value before we start talking about nonrecourse." Far and away, most commercial real estate loans from Umpqua Bank are recourse, especially when it comes to construction. "If someone is looking for a full loan amount and doesn't want recourse, it is not a deal for us," said Swanson. "But if there is a way to structure a deal to make it work, such as limited or reducing recourse, we will do it." It may pay to be flexible. As the re- gional banks' appetite for retail is grow- ing, more of the lenders are considering nonrecourse, says Yazdi. "If you have a strong deal that the bank believes in, within a good market, the banks will give you that nonrecourse loan so they can stay competitive with CMBS." Recourse or nonrecourse also de- pends on what a bank does with its loans. "Some banks keep debt on the balance sheet and would be more inter- ested in keeping a loan as recourse," said Raitu. Not that banks are taking unnec- essary risks. The default rate for commer- cial mortgages over the past few years has stayed below 3 percent, says Raitu. And this at a time when loans for commercial real estate have been increasing. "It's not as though anyone is re- treating," said Costello. "The whole pie is getting bigger, but some types of lenders have gained market share. All types of lenders have been increasing deal flows — it's just that the regional banks are growing faster." SCT Register at the Early Bird Rate! Register by December 11, 2015 to take advantage of the Early Bird rate. Join over 36,000 attendees and 1,000 exhibitors in Las Vegas for the industry's largest event to network, learn, and make deals. #RECon16 Book Your Hotel! Plan ahead to receive the biggest savings and best amenities at Las Vegas hotels. As the official hotel provider, onPeak (formerly known as Travel Planners) has selected prime hotels conveniently located and priced to meet your needs. Book early as room rates at some hotels will increase on December 18, 2015. BOOK FOR MAY SAVE Visit www.icscrecon.org for more information, to register and book your hotel. DECEMBER 11 18 8 May 22 – 25, 2016 I Las Vegas, NV Las Vegas Convention Center & Westgate Hotel 112 S C T / D e c e m b e r 2 0 1 5

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