Survey examines commercial borrowing expectations for 2012

Industry experts anticipate the debt level of commercial real estate borrowers to rise significantly during the course of 2012, World Property Channel reports.

Industry experts anticipate the debt level of commercial real estate borrowers to rise significantly during the course of 2012, World Property Channel reports.

According to the news source, throughout 2012, commercial real estate borrowers will keep a close eye on the amount of equity capital acquired by commercial banks, private investors and life companies in order to find an appropriate lenders for development projects.

Meanwhile, during the most recent Mortgage Bankers Association conference in Atlanta, Jones Lang LaSalle and Penton Media Research partnered to conduct a survey on a number of commercial borrowers and lenders attending the conference. In total, the group surveyed included 186 borrowers and 136 lenders with a median asset value of $73.3 million to examine what commercial borrow sentiment could look like during 2012.

"With $415 billion of mortgage maturities on the horizon in 2012 alone, and opportunistic plays in the market, it makes sense that a majority of borrowers still need more capital lending in 2012 and they're finding challenges that economic volatility throws at the commercial debt markets," said Tom Fish of Jones Lang LaSalle. "Even with the existing global economic concerns, debt financing will remain very strong in the core space from life companies and domestic banks and we expect the CMBS market to continue to regain footing in 2012."     

The survey found that 77 percent of respondents borrowed from commercial banks in 2011, making them the most active lenders in the industry. Meanwhile, nearly one in three chose to conduct their commercial borrowing with life companies, while one in four went with private investors.

According to the report, these trends will most likely continue into the new year, and could even prompt borrowers to examine the latter two sources of financing rather than conducting business with only commercial banks. In addition, a majority of borrowers say they will be using primary loans or short term construction loans, while roughly 30 percent will instead be using a line of credit.

Additionally, a majority of respondents say that the borrowing and lending process continues to improve in the commercial real estate industry. This is due to a greater level of certainty that lenders will be prompt about completing the process. The report found that among borrowers, this quality was the most important since it can provide financial safety and soundness in a hectic lending environment.



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