A report from CoStar showed that commercial real estate lending has provided a mixed bag for property management companies, but there were notable positives during the second quarter.
Overall lending for commercial real estate fell 0.4 percent when compared to the first quarter's figures, as well as 3.4 percent from the same quarter in 2011, according to the report.
Despite decline, some investment positives found
Nonresidential investment rose 0.5 percent during the second quarter, but the figure had an increase of 9 percent compared to the same quarter in 2011, the report explained. In addition, multifamily and investment lending experienced an increase of more than 1.5 percent during the second quarter when compared with the previous quarter, as well as a yearly growth increase of approximately 4 percent. The loan balance for investment and multifamily commercial real estate properties rose by more than $6.5 billion.
Construction, development lending falls during Q2
The picture was not completely positive, as multifamily lending struggled to a decline of nearly 21 percent from the second quarter of last year, the report explained. Additionally, construction spending fell nearly 5 percent. Overall loan balances for these types fell by nearly $11 billion during the quarter from the previous period.
The report noted that office and retail properties that were considered small experienced improved demand in the past few months, but not to the level that multifamily properties had reached.
Delinquencies, foreclosures improve for CRE properties
Overall, the value of delinquent and foreclosed commercial real estate properties dropped by more than 12 percent from the previous quarter, the report explained. Compared to the same point in 2011, the figure dropped nearly 30 percent.
Close to $1.75 billion worth of foreclosures were rid of by financial institutions, with multifamily properties making up the most significant portion of that figure, according to CoStar. There are still more than $25 billion in foreclosures held by financial institutions, and more than half of the figure is from development and construction properties.
There was a notable decline in problem banks during the quarter, and the figure fell to a level not seen since 2009, the report said. Overall, the asset level fell $10 billion, while only 15 institutions closed during the quarter.
The total interest in commercial properties by investors continued to be elevated during the summer, the report explained, citing the Federal Reserve's Beige Book. This was highest for multifamily properties.
Posted in Commercial Lending and Mortgages
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