NEW YORK CITY—Regional and local banks have moved to the top rung among commercial property lending classes, and now account of 21% of all commercial mortgage originations in the first half of 2016, says Real Capital Analytics. RCA credits an acceleration of lending activity among smaller banks for their newfound prominence.
“The growth of regional/local banks as a source of financing has been seen across all property types with the industrial, retail and hotel sectors showing the most pronounced gains in their market share over the past year,” according to an RCA special report. Previously, smaller banks had averaged just 12% between 2011 and 2014 across all property types.
On the face of it, the rapid growth in smaller banks' lending might appear to be a cause for concern, perhaps suggesting “undisciplined growth,” the report states. “Instead, our analysis lends credence to the view that these lenders are stepping up to fill a critical gap as CMBS lenders have pulled back.”
Furthermore, the increase in regulatory burdens on construction lending has also led more banks to increase activity for conventional property financing. Regional/local banks have been particularly active with refinance activity in H1'16, says RCA.
“From 2012 to 2015 the book of business for these lenders was more heavily weighted towards new acquisitions, which represented 69% of their business,” according to RCA. “In H1'16, however, half of all their business has been focused on refinancing.” In particular, small private investors have been the biggest beneficiary of this trend, “as they have been the borrowers behind 83% of commercial mortgages made by regional/local banks in H1'16.”
During this year's first half, the Southeast and Midwest have seen especially rapid growth in lending activity by smaller banks, although these lenders have increased market share across all regions, says RCA. The Southeast and Midwest previously had a greater reliance ion CMBS financing.
In the Northeast, regional/local banks were responsible for a quarter of all commercial mortgages originated over the past year, reflecting “the dominance of a few banks in New York,” says RCA. Average size of these loans was just $6.1 million compared with $13 million averaged by national banks and CMBS, and $24.5 million averaged by insurers.
More than 300 of the industry's leading national investors, REITs, banks, private equity firms, asset management firms and other institutions will join us as we explore the market conditions behind the trends at this year's RealShare National Investment & Finance, scheduled for Oct. 5 and 6 at the Roosevelt Hotel in New York City. Learn more.
“The growth of regional/local banks as a source of financing has been seen across all property types with the industrial, retail and hotel sectors showing the most pronounced gains in their market share over the past year,” according to an RCA special report. Previously, smaller banks had averaged just 12% between 2011 and 2014 across all property types.
On the face of it, the rapid growth in smaller banks' lending might appear to be a cause for concern, perhaps suggesting “undisciplined growth,” the report states. “Instead, our analysis lends credence to the view that these lenders are stepping up to fill a critical gap as CMBS lenders have pulled back.”
Furthermore, the increase in regulatory burdens on construction lending has also led more banks to increase activity for conventional property financing. Regional/local banks have been particularly active with refinance activity in H1'16, says RCA.
“From 2012 to 2015 the book of business for these lenders was more heavily weighted towards new acquisitions, which represented 69% of their business,” according to RCA. “In H1'16, however, half of all their business has been focused on refinancing.” In particular, small private investors have been the biggest beneficiary of this trend, “as they have been the borrowers behind 83% of commercial mortgages made by regional/local banks in H1'16.”
During this year's first half, the Southeast and Midwest have seen especially rapid growth in lending activity by smaller banks, although these lenders have increased market share across all regions, says RCA. The Southeast and Midwest previously had a greater reliance ion CMBS financing.
In the Northeast, regional/local banks were responsible for a quarter of all commercial mortgages originated over the past year, reflecting “the dominance of a few banks in
More than 300 of the industry's leading national investors, REITs, banks, private equity firms, asset management firms and other institutions will join us as we explore the market conditions behind the trends at this year's RealShare National Investment & Finance, scheduled for Oct. 5 and 6 at the Roosevelt Hotel in
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