State of the State of Commercial Lending

At a recent Denver Metro Commercial Association of REALTORS® (DMCAR) Industrial and Land Marketing meeting the speaker was Brandon Rogers of Terrix Financial. Mr. Rogers spoke to the group of commercial real estate brokers about the current state of commercial lending in the Denver market. Terrix represents insurance companies as well as in-state and out-of-state banks for commercial loans. His initial description of the market was summed up in one word: "chaos." Even though the word "chaos" best describes the current market Rogers went on to say that it is not all doom and gloom.

Rogers adds that many lenders are gone and more are just sitting on the sidelines waiting for more normality. A few words to describe commercial loans in this climate: lenders are more conservative, loans are harder to get than 12 to 15 months ago, loans are on a case-by-case basis, lenders are looking more at the property itself, location, visibility, access, etc.

Insurance companies are conservative as always looking for stable properties. Rogers says that money has freed up some in the last 2 weeks for apartments, industrial, and office. Banks are doing 70 to 75% loans.

On the customer side, borrowers are looking to bridge the 24 to 30 month time frame until commercial credit frees up.

"Some lenders are still allowing seller carry back seconds. Some lenders look at the debt coverage ratio of both the first and second and others don't," according to Rogers.

Fees may increase some since there is less competition as lenders withdraw from the market.

"The deals are harder but they are getting done despite what the media says," says Rogers. "There is money still out there."

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