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CRE Finance World, Winter 2013

A Modest Outlook for Commercial Real Estate Chart 3 Two key factors are leading to increased CRE lending. First, banks CRE Loan Spigot Opens Wider have been able to deleverage a sizable share of their troubled CRE loans in recent years. The delinquency rate for CRE loans issued by the top 100 commercial banks has fallen to below 6% after peaking at almost 9% in 2010, according to the Federal Reserve. Similarly, the charge-off rate for CRE loans has dropped from its peak of almost 3% in 2009 to 1%. Today’s delinquency and charge-off rates are still well above their respective 2000 to 2007 averages of 1.5% and 0.1%. Nonetheless, a dwindling amount of troubled loans has cleared space for new CRE loan issuance. Second, with the federal funds rate and five- and 10-year Treasury yields at historic low levels, the cost of lending has fallen for commercial banks. The net percentage of commercial banks decreasing the spread of their loan rates over the cost of funds has increased since the second half of 2010, according to the Sources: Federal Reserve, Moody’s Analytics Federal Reserve. What our clients are saying: Responsive Customized Solutions Fast Independent Customer Service Complex Deals Professional Distressed Deals Deep Experience Smart Asset Management . Servicing . Customized Solutions T R I M O N T R E A . C O M A publication of Winter issue 2013 sponsored by CRE Finance World Winter 2013 55


CRE Finance World, Winter 2013
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