More money available for commercial loans

Real Estate Weekly, Feb 16, 2000

Borrowers seeking commercial real estate loans on existing leased properties have much to celebrate as we head into the year 2000, reports a quarterly survey of 40 commercial lenders by Fantini & Gorga, one of New England's leading commercial mortgage banking firms.

"Insurance companies, securitized lenders and banks all have increased allocations of funds for such loans and will be aggressively seeking to increase their loan originations in 2000," said George Fantini, chairman of Fantini & Gorga, which conducted the survey for the fourth quarter of 1999. "Growing competition has already led to a tightening of loan spreads. These loans are priced at spreads above Treasuries."

Lenders' interest centered on apartment, office, retail and industrial properties, according to the survey. To a lesser extent, there was also interest in hotels and congregate housing loans.

"Lenders feel very positive about the condition of their current loan portfolios, quality of current loan submissions and the likelihood that the current favorable lending environment will continue for existing cash-flowing properties. There is a sufficient supply of fixed-rate permanent loans," Fantini concluded. "Lenders are less enthusiastic about development loans."

The three lender groups surveyed by Fantini & Gorga were: life insurance companies, conduits and banks.