Commercial borrowers dealing with banks’ tighter belts

Written by Lease Dude

San Antonio Business Journal - by Sandra Lowe Sanchez

Borrowers beware: The commercial real estate lending landscape compared to a year ago is considerably dryer. Financiers from insurance companies and pension funds to banks want more equity — and they’re not taking the same risks they took just a couple of years ago.

“All the financial institutions, they want to see more equity in a project,” notes Steve McAllister, president of D. Ansley Co. Inc., which helps borrowers find lending sources from insurance companies to other equity investors.

Twelve to 18 months ago, a commercial office, retail or industrial loan might get done with 15 percent equity. Not today. Now, it’s 25 percent to 45 percent, depending on the lender. Hotel investors need between 40 percent and 50 percent equity, McAllister adds.

Lenders — from life insurance companies to pension funds — are cherry-picking the loans they want to make.