Banks have regained a dominant role in the financing space.

The turnaround is dramatic. Having put their financial issues behind them and gone back to growing their loan portfolios, commercial banks have become a leading financing source in the commercial real estate space. For borrowers, that means increasingly attractive terms for permanent and interim loans.

Indeed, banks are becoming formidable competitors as more and more of them offer longer-term fixed-rate, and increasingly non-recourse, financing. Hugh Frater, chairman of Berkadia, termed them “the most competitive capital source” in the areas of interest rates and degree of flexibility. Furthermore, he said, “on the shorter-term maturity deals, banks have become even more competitive—they can be unbeatable.”

Depository institutions’ competitiveness in the financing marketplace today is fed by their loan appetites. Banks are anxious to make loans at a time when there are not that many loan opportunities in the marketplace, observed Richard Walter, head of Bank AssetPoint and senior managing director at Promontory Interfinancial Network L.L.C., which provides advisory and other services to a network of some 1,250 banks. “Banks that we work with are very anxious to expand (their lending in the sector).”

Read the full article in the June 2014 issue of CPE. Access is free!