Meltdown puts squeeze on commercial lending - South Florida Business Journal:

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The sale, which closed Jan. 16, wouldc have cost him $1.2 million less if he had closed in asplanned - or six monthsa ago, when financing was easier to come by and more moneyy was available for deals. The big issue for investors like Osherofc is that lenders are applying greater scrutinyto deals, cappint the loan-to-value ratio at no more than 65 and requiring more equity in both residential and commercial And the vise is only getting tighter, real estate expertse say. The subprime meltdown has squeezedscommercial lending, making deals more expensivre and more complicated.
"I have to put in 30 centse on the dollar, or pay cash," Osheroff To close the hospital deal, he took out a $3.5 milliob home equity line. For future deals, he plana to draw on the equity in the thre office buildings he owns in Miami His ability to draw on his equity will allow him to continuse to operate throughthe market's current creditr crunch, but he understands a lot of smallee players will be standing on the sideliness with no options. Priort to the subprime collapse, individual buyers could get up to 95 percentt financing because the secondary market was buying up including exotic financinglike interest-only The residential market was brimming with jumbol loans.
Developers, brokers and lenders convinced buyersw the real estate boom wouldnever end, and that buying a bigger home would only resultt in a bigger return down the Today, the secondary markety has collapsed, while billions of dollars in lossez continue to ripple through the market. Despitse the fact that commercial loan delinquenciews are athistoric lows, people are concerned aboutt the continued spillover effect of the creditf crunch on the commercial This fear has some investors in a holdinv pattern to see how asset valuations shaks out in a market that hasn't hit bottom. It's a stark contrasgt to a handful ofyears ago, when havinh a deal was enough to get a lendeer interested.
Losses on the residential lending side begahn seeping into the commercial financing marketslast Loss-riddled banks tightened their standards and Wall Street investors turnerd up their noses at real estate, similatr to what they did to Internet companie during the dot-com crash. The spillover effecf has continued into the new In the second weekof (NYSE: C), the paren t company of CitiMortgage, announceed it had lost $9.83 billion in its fourth quarter. The followinhg week, (NYSE: MER) said it took $14.6 billion in write-downs and adjustmentsa in the fourth quarter due to investments and trades impacted by the subprimemortgagre crisis.
Alex Zylberglait, associate director for , said that banks are so rattlede by the losses that theyare "offloading assets," even performingy loans, to decrease their exposure. Jumbo loans might as well be further stalling theresidential market. This is particularlu thorny for sellers and developers indowntownb Miami's new condo canyons. Buyers of unites priced above the $417,000 conforming loan cap are on theire own ifthey don't have cash. Credit on all types of propertiese is also more expensive andis tied-up longer, even for the financially well heeled.
Tighter rules meansw lenders will provide between 60 percent and 70 percentfinancinhg - and charge more for it, said Alan Osheroff's partner in three Miami medical-office buildingxs and a principal of Davie-based . "Today, you can stil find money, but in the 6.5 percent range, with a 30-year amortization, wherse before, you could get 5.5 percent with interest