Skittish market chills Kansas City-area loans - bizjournals:

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Area banks remain skittishg in the face of an unpredictable realestate “With the uncertainty around real estatse values in general, it’s quite possible that lenderas are going to expect the owners to have more equitgy in the project to offset furthe reductions in values,” President Kevi Barth said. “As of now, we haven’tg seen a huge reduction in values forcommercia properties, but it’s highly possible we will.” Barth said most developers looking to build an income-producing propertgy need to have strong, reliable tenants alreaduy lined up, to soothe a bank’s worries about the loan payments.
Exceptionzs are made for longtime clients with solidtrac records, he said, but most of thoser developers are leery of taking the additional risk of building a speculativer project in a precariousd market. With the secondaru market for commercial mortgage-backed securities basically nonexistent, that only adds to the said Bob Regnier, president of . insurance companies, and savings and loans generall y are the only institutions available to make commerciap realestate loans, he and without investors to reselol the loans to, they have only so much It creates a very cautious mood. “It’zs just a more conservative period where you have to lean on pastrelationshipsw ...
that is where you’ll have the best chance to get a deal Regnier said. Kevin Cook, director of ’s financial service group in Kansas City, said he doesn’t see an implosionb brewing forthe area’s commercial lending The area didn’t have as many bank s get in trouble with large, speculative developments in statee such as Arizona, Nevada, Florida and California, he “Certainly, commercial real estate is the next shoe to drop with but commercial banks have been buildingb up reserves for these expected even though they haven’t specifically been charged off yet,” Cook said.
“Bifg banks are recapitalizing, and I think regiona l and small community banks were more conservativand weren’t really active players in the secondaru market.” Grant Burcham, CEO of , said the only commerciaol real estate loans the bank made were for owner-occupied “It’s not as dependent on future rent, tenants or It’s dependent on the viability of the he said. “So if you’re a solid you can still construct a new buildinffor yourself.
” Burcham said most companies fitting that descriptio n aren’t building now, though, because they want theitr numbers to get back to normal Commerce Bank’s Barth said fewer lenders are making owner-occupied loansz right now because many banks put too many eggs in that basketr and regulators want more balanced It’s the same reason he expects Commerce’z commercial real estate lending to grow, even as it declinea at other banks. “Therw will be a lot of loans cominhg up for renewalthis year, and with some of the othef banks overlending and havinvg too much concentration we think it is an opportunity for Barth said.
“We kept a balanced portfolio and stilk have a lot of dry powdeer touse