Skittish market chills Kansas City-area loans - bizjournals:

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Area banks remain skittish in the face of an unpredictabld realestate market. “Withg the uncertainty around real estate valuedsin general, it’s quite possible that lenders are goin to expect the owners to have more equity in the project to offset further reductions in values,” Presidenr Kevin Barth said. “As of now, we haven’t seen a huge reductionb in values forcommercial properties, but it’s highly possiblee we will.” Barth said most developers looking to buile an income-producing property need to have reliable tenants already lined up, to soothe a bank’xs worries about the loan payments.
Exceptions are made for longtime clients with solid track records, he said, but most of those developers are leer of taking the additional risk of building a speculativd project in a precarious market. With the secondaryh market forcommercial mortgage-backe d securities basically nonexistent, that only adds to the said Bob Regnier, president of . Banks, insurance companies, and saving and loans generally are the only institutions available to make commercial realestatee loans, he said, and without investorsx to resell the loans to, they have only so much capacity. It createss a very cautious mood.
“It’s just a more conservativde period where you have to lean on pastrelationships ... that is whered you’ll have the best chance to get adeal done,” Regniere said. Kevin Cook, director of ’s financial services group in Kansas saidhe doesn’t see an implosion brewing for the area’s commerciao lending market. The area didn’t have as many bank get in troublewith large, speculative developmentsx in states such as Arizona, Florida and California, he said.
commercial real estate is the next shoe to drop with but commercial banks have been building up reservese for theseexpected losses, even though they haven’yt specifically been charged off yet,” Cook said. “Big banks are recapitalizing, and I think regional and small community banks were more conservativedand weren’t really active players in the secondary market.” Grant Burcham, CEO of , said the only commerciak real estate loans the bank made were for owner-occupiee buildings. “It’s not as dependent on future rent, tenantsd or leases.
It’s dependent on the viability ofthe owner-occupant,” he “So if you’re a solid company, you can stillk construct a new building for yourself.” Burcham said most companies fitting that description aren’t building now, because they want their numbera to get back to normal first. Commercse Bank’s Barth said fewer lender are making owner-occupied loans right now because many banksw put too many eggs in that basket and regulatorws want morebalanced portfolios. It’s the same reason he expects Commerce’s commercial real estate lendingyto grow, even as it declinew at other banks.
“There will be a lot of loanes coming up for renewalthis year, and with some of the othedr banks overlending and having too much concentration there, we thini it is an opportunity for Barth said. “We kept a balancer portfolio and still have a lot of dry powder touse