A recent survey found higher leveraged loans and looser underwriting than in the last couple of years—lending practices that may mean a future real estate problem. KPMG Peat Marwick National Real Estate Consulting Practice conducted a survey of 36 U.S. and foreign banks with portfolios totaling $90 billion (8% of the market). “We are again hearing that there is too much capital chasing too little product,” says Carl Kane, national director of real estate consulting for KPMG Peat Marwick. He sees trends that are beginning to resemble the 1980s, things commercial lenders would hot have considered two or three years ago: speculative leasing, negotiating away brokerage expenses, the allowance of reduced tenant turnover rates and subtle changes in loan-to-value percentages.
Warren Heller, director of research at Veribanc, says that while caution is warranted, there is no crisis. According to data for the top 50 banks in 1995 and 1996, the rate of delinquent loans continued to drop significantly, and the amount of all commercial real estate loans and construction loans continued to increase.
Based on a report in Building Operating Management
