Commercial mortgage requirements could get tougher as federal banking regulators issued guidance to banks on commercial loans and recommended that banks with high concentrations of certain loans keep a higher capital cushion than required.
The third largest hotel REIT, Equity Inns, Inc., completed a $73.5 million senior debt offering on a 10-year loan at 5.44% fixed, underwritten by GE Real Estate. Equity Inns owns 123 hotels with 14,788 rooms located in 36 states with a focus on upscale extended stay, all-suite and midscale limited-service hotels. The loan reduced Equity Inns average interest rate cost and shifted the portion of fixed rate debt to 97%.
The Federal Reserve's Senior Loan Officer Opinion Survey for October showed 12% of domestic banks reporting an increase in demand for commercial real estate loans over the last three months, while foreign owned banks US branches showed no change. In the July survey, 1/4 of US banks and 15 percent of foreign bank's US branches reported increases in demand. The survey showed that 10 percent of banks had eased lending standards on commercial and industrial loans generally, but no change in standards for commercial real estate loans.
Federal Reserve Governor Susan Bies indicated that Fed concern over «risky» mortgages isn't limited to the residential market in comments made Wednesday. Fed bank regulators are «carefully monitoring» the accumulation of large commercial loan exposure at some banks and declining underwriting standards on commercial loans; Bies expressed concern that commercial real estate loans not repeat their role in the banking problems of the late '80s to early '90s.
Kennedy Funding closed the $3.25 million loan on a Las Vegas land acquisition loan for Garces Venture, LLC., a hotel developer. The property is a 0.72 acre parcel on South Las Vegas Boulevard.
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