Commercial Real Estate Finance

Posts Tagged ‘Bank of America’

Protesting bank-financed mountaintop removal

“It’s one thing if your potential borrower is dumping cyanide in a river.  But if they’re dumping carbon dioxide into the air, which is not exactly illegal — what do you do?”

For a lender, this is an obvious ethical dilemma.  I think most lenders would agree that they wouldn’t want to finance a business that is doing something illegal (i.e. dumping cyanide in a river).  But there are plenty of lenders who finance profitable businesses that are 100% legal, albeit in some sort of moral “gray area” (i.e. dumping carbon dioxide into the air).  According to this article published on Monday by the New York Times (NYSE: NYT) from where I got the above quote, banks are starting to move away from making loans in that gray area.

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Commercial Real Estate Week In Review for the Week of August 14-20

- Will the Federal Reserve, FDIC, SEC and Commodity Futures Trading Commission really be transparent in the Dodd-Frank Act?

- How much of an impact is the current housing market complicating things for Fannie Mae and Freddie Mac?

- Bank of America is considering paring its stake in  BlackRock Inc., citing its not a core asset.

- The potential shake-up in ownership of bookseller giant Barnes & Noble has shopping center landlords nervous.

- Delinquent construction loans have reached a record level in the U.S.
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Traditionally, August is a dead month for commercial real estate. I understand some of you may be checking from a favorite vacation spot, so we can take the opportunity to broaden the scope of our discussion.

While perhaps not top of mind yet, once Labor Day arrives, election season will be upon us. The 2010 mid-term elections are important in their own right and for setting the tone for the presidential cycle in 2012. Freddie and Fannie alone are enough to make government policy important, and that’s just the beginning. Read the rest of this entry »

Commercial Real Estate Week In Review for the Week of August 7-13

- Bank of America is seeing very few requests from investors and insurers to repurchase sour loans.

- Could teaming up with REITs be a way for pension funds to boost their returns?

- Industrial Income REIT has been busy, buying 16 assets for $43.5 M.

- How does the Volcker rule change the game for private equity investments?

- Grant Thornton is predicting there will not be a recovery in commercial real estate until 2011.
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Any of you familiar with poker have heard the expression “betting on tilt.”  Essentially, it describes a player who has let their emotions get the best of them, and is overbetting a particular hand (or multiple hands) to try and make back the money they just lost on a big hand.  Rather than play the cards in from of them, they have let a bad beat cloud their judgment into making poor decisions.

And that brings us to Lehman (remember them?), the once upon a time Wall Street behemoth who crumbled into oblivion with bad commercial real estate bets.  Well, now they are doubling down on commercial real estate, betting that we have reached a bottom. Read the rest of this entry »

Paul Vlocker - The Financial Reformist

With the financial reform bill signed into law just a couple of weeks ago, I am interested to see how the legislation will change the landscape for major commercial real estate investors.  The new law puts constraints on investment banks’ ability to be both advisors as well as principal investors.  Some of the biggest and strongest real estate investors through the peak of the last cycle were investment banks housing advisory and principal investment business lines under one roof.  As a result of financial reform, however, investment banks like Goldman (NYSE: GS), BoA (NYSE: BAC), and Morgan Stanley (NYSE: MS) will have to significantly downsize and perhaps even shed entirely their principal investment businesses, including real estate funds.  Will the selling and spinning-off of real estate funds be a potential buying opportunity for existing investment managers?

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Commercial Real Estate Week In Review for the week of July 10-16.

- The Senate approved sweeping legislation to revamp financial regulation.

- Blackstone was appointed manager of Bank of America’s Asian real estate fund.

- Financial reform could affect GE’s real estate assets.

- Firms that sold MBS to Fannie and Freddie are being subpoenaed.  Uh oh.

- Will apartment REITs soon be facing headwinds? Credit Suisse thinks so.
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CMBS stands for commercial mortgage backed securities.  Of course, if you asked borrowers about 18 months ago (and many even today), you might have thought it stood for Commercial Mortgage Bull $hit.  When CMBS financing was introduced to the commercial real estate industry earlier in the decade, it was viewed as a Godsend.  This was because rates and terms were better than those being put out on term sheets from conventional banks.  The reason for this, of course was that the loan originators (often large banks) would not keep these loans on their balance sheets, but instead sell them off in tranches, with the help of investment banks, to individual investors who had a wider appetite for risk.  Rather than putting all of their eggs in one basket with one property, they technically owned pieces of multiple properties that were all pooled together.  On the surface this seemed like a great idea and a win-win for all involved.  Obviously, the lax underwriting standards for these loans did not (and maybe could not) have taken into account the tumultuous events of the credit crisis. Read the rest of this entry »

Listed below are the Top 10 U.S. Banks as of 12/31/2009. Total Assets (in thousands) as well as total deposits are listed. Troubled asset ratios are given for reference though were not factored into the ranking. For more information click on the name of the bank to be taken to the Federal Reserve System’s National Information Center where you can view the bank holding company’s performance reports and financial statements.

10. SunTrust Bank - Atlanta, GA
Total Assets: $174,166,000
Total Deposits: 118,532,000
TAR: 40.5

9. Bank of New York Mellon Corp. - New York, NY
Total Assets: $212,336,000
Total Deposits: $57,327,000
TAR: 8.7
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This week we are listing the top ten banks with nonperforming real estate loans. Overall, there are nineteen banks in the US with more than $1 billion of nonperforming commercial real estate loans. The top two lead the way with a combined value of non performing loans of just under $20 billion! All values listed are in millions.

10. SunTrust Bank - Atlanta, GA
Total Assets $172,814
Commercial Real Estate Loans $23,860
Nonperf. Loans $2,053
% Nonperf. Loans 9%

9. U.S. Bancorp - Minneapolis, MN
Total Assets $265,058
Commercial Real Estate Loans $32,098
Nonperf. Loans $2,083
% Nonperf. Loans7%

8. BB&T - Winston-Salem, NC
Total Assets $165,329
Commercial Real Estate Loans $40,401
Nonperf. Loans $2,299
% Nonperf. Loans 6%

7. Citigroup - New York, NY
Total Assets $1,888,599
Commercial Real Estate Loans $22,467
Nonperf. Loans $2,464
% Nonperf. Loans 11%

6. Fifth Third Bancorp - Cincinnati, OH
Total Assets $110,740
Commercial Real Estate Loans $18,647
Nonperf. Loans $2,487
% Nonperf. Loans 13%

5. J.P. Morgan - New York, NY
Total Assets $2,041,009
Commercial Real Estate Loans $63,402
Nonperf. Loans $2,490
% Nonperf. Loans 4%
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