The U.S. commercial lending climate has improved markedly since the dark days of the Great Recession, when billions of dollars in properties held by over-leveraged owners ended up on the books of banks and other lenders, said experts at the recent 13th annual Trigild Lender Conference in San Diego.
The three-day gathering, presented by the locally based real estate services firm, focused on commercial property loan and investment trends and drew 400 participants from around the nation, Trigild Chief Operating Officer Judy Hoffman said.
San Diego County is generally quiet in terms of commercial loan distress, Hoffman said, although other U.S. regions are still dealing with issues lingering from the national housing meltdown.
As of September, San Diego County had $219.2 million in loans that were at least 30 days delinquent, amounting to 3.05 percent of all balances, according to the research firm Trepp LLC, which tracks commercial property loans bundled in mortgage-backed securities. That percentage was well below the national rate of 8.14 percent.
A year ago, the delinquency rate was 4.58 percent for the local region and 9.99 percent for the U.S.
Even as such indicators improve, to those in the world of property finance, incessant squabbling in Washington, D.C., over debt ceilings and defaults deprive businesses of a sense of certainty about the future that they need most to grow in a fragile recovery, one of the conference’s featured experts said.
“It’s a good thing for Congress to be dealing with all of the entitlement issues, but wrestling at the edge of the cliff is not the way to do it,” said Robert Guest, U.S. editor of the London-based news magazine The Economist.
Hoffman said the commercial financing industry is watching to see what happens from 2015 to 2017, as a large proportion of loans taken out during the height of the pre-meltdown U.S. real estate buying frenzy of 2005-07 reach their 10-year maturity dates. Depending on where interest rates are, some property owners could face challenges refinancing their loans.
Prior to the start of the Oct. 16-18 gathering at downtown’s Westin Gaslamp hotel, Hoffman said Trigild’s still-busy national caseload has been shifting since 2010 from court receivership appointments spurred by property owners’ loan delinquencies and bankruptcies, to management assignments from the new owners of properties that lenders sold as the recession ebbed.
In response, Trigild has been adding to its staff of more than 100 at University Towne Center and several regional U.S. offices, including people experienced in managing specific types of properties, such as retail centers, office buildings and hotels.