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Charles Krawitz on The Banking Comeback
On the latest episode of The Alter Group Podcast on Real Estate, Charles Krawitz used his 25 years of experience in financing of thousands of transactions, and the sale of highly distressed loans and REO assets to give us an inside look at the recovery of the banking sector. Banks now hold 49% of all commercial real estate debt and mortgage originations for the sector spiked 24% last year.
According to Charles, larger and regional banks which were saddled with distressed assets after 2007 have worked through their backlog of delinquent loans and are winding down the special assets groups tasked with dealing with problem notes and REO assets. Now, banks are once again seeing prospects in multifamily, medical office and grocery-anchored retail.
He spells out the trends of lending with banks doing full-recourse 75% loan-to-values but with shorter terms – interim or bridge loans rolling into a 3-5 year mini-perm. On the other hand life insurance companies, which are doing more originations than before the recession, are doing 3-20 year loans with 60% LTVs. Conduits which topped $40 billion in 2012, are doing 10 year loans (albeit with a preference for institutional-grade assets, higher-credit borrowers, significant equity).
Beyond lending from their balance sheets, banks are also procuring capital on behalf of their clients from sources such as the GSA, life insurance and the CMBS. According to Charles, being a third-party solutions provider to clients is one of the new frontiers for regional and larger banks.
To hear Charles Krawitz on the Banking Bounceback, listen to the latest episode of the AlterNow Podcasts.