Banc Investment Group Introduces Commercial Real Estate Lending Index.New, Forward-Looking Benchmark Helps Community Bankers Improve CRE CRE Commercial Real Estate CRE Corporate Real Estate CRE Commission for Racial Equality (Scotland) CRE CCD (Charge Coupled Device) and Readout Electronics CRE Camp Response Element Lending; Conditions Likely to Continue Deteriorating After Difficult First Quarter SAN FRANCISCO San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden -- Commercial real estate lending conditions for community banks are likely to decline further in coming quarters after worsening wors·en tr. & intr.v. wors·ened, wors·en·ing, wors·ens To make or become worse. Noun 1. worsening - process of changing to an inferior state decline in quality, deterioration, declension significantly in the first quarter of 2009, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the Commercial Real Estate Lending Index from Banc Investment Group (BIG). The BIG CRE Index[R] fell to 80.58 in the first quarter of 2009 from 90.50 in the fourth quarter of 2008 - a sharp 10.9% decline - due to weakening economic conditions and an across-the-board deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in the retail, industrial, office and the multifamily markets. Since the baseline period as of April 30, 2007, lending conditions for community banks have eroded e·rode v. e·rod·ed, e·rod·ing, e·rodes v.tr. 1. To wear (something) away by or as if by abrasion: Waves eroded the shore. 2. To eat into; corrode. 19.4%. The data strongly suggests that the lending environment will weaken further in 2009. "Commercial Real Estate lending conditions will likely deteriorate de·te·ri·o·rate v. 1. To grow worse in function or condition. 2. To weaken or disintegrate. further after a sharp drop in the first quarter of 2009, creating both new opportunities and challenges for community banks," said Chris Nichols, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Banc Investment Group, the capital markets group of Pacific Coast Bankers' Bancshares. "CRE lending conditions were impacted by a perfect storm of economic uncertainty, tighter credit, falling consumer confidence and substantially higher unemployment. Of particular note was the reversal of fortunes in the multifamily market, which had been faring well, but turned negative in the first quarter. In this environment, bankers need to pay particular attention to loans on a risk-adjusted basis." Launched in May 2009, the BIG CRE Index is the nation's only forward-looking benchmark of relative strength of CRE market conditions for community banks. Values in the BIG CRE Index are derived from leading third-party providers and data collected by BIG's Loan Pricing Model used by community banks across the country. The BIG CRE Index is calculated using a proprietary algorithm. "The BIG CRE Index is a future market indicator designed to help community bankers make more informed lending decisions," Nichols said. "The BIG CRE Index is part of our powerful suite of lending solutions, which includes the BIG Loan Pricing Model, an advanced analytics platform that helps community banks improve loan portfolio management." Published quarterly, the BIG CRE Index focuses on the four major commercial real estate sectors - multifamily, office, retail and industrial - and covers the largest metropolitan areas in the U.S. The following is a synopsis A summary; a brief statement, less than the whole. A synopsis is a condensation of something—for example, a synopsis of a trial record. of community bank lending conditions in the first quarter of 2009 for each of the major commercial real estate lending categories: Retail * The office sector of the index fell to 78.36, down 11.03% from 88.07 in the fourth quarter of 2008 and 21.28% from 99.54 in the second quarter of 2007. * Vacancy rates for neighborhood shopping malls soared to 9.5%. * Vacancy rates in regional malls hit a record high of 7.9%. * Rent fell by 1.8%, far deeper than the 1.0% drop for all of 2008. * Overall, 63 of 76 markets experienced a rise in vacancy rates. All but one posted negative rent growth. Industrial * The industrial sector of the index fell to 69.80, down 16.87% from 83.96 in the fourth quarter of 2008 and 31.51% from 101.91 in the second quarter of 2007. * A large amount of inventory is building in coastal ports and slackening demand due to tepid tep·id adj. 1. Moderately warm; lukewarm. 2. Lacking in emotional warmth or enthusiasm; halfhearted: "the tepid conservatism of the fifties" Irving Howe. consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. will further weaken the industrial sector in coming quarters. * The domestic warehouse market will also soften due to weakness in the domestic shipping business. Multifamily * The multifamily sector of the index fell to 91.43, down 6.15% from 97.42 in the fourth quarter of 2008 and down 3.81% from 95.05 in the second quarter of 2007. * Multifamily has been more resilient and actually improved slightly through 2008 compared to the second quarter of 2007. However, the economic downturn began to take its toll in the first quarter of 2009. Construction continued at a steady pace, while net absorption rates dropped, pushing up vacancies and resulting in rent declines. * Vacancy rates rose to 7.2% in the first quarter of 2009. Rent growth for the quarter was negative 1.1%. Office * The retail sector of the index fell to 82.72, down 10.62% from 92.55 in the fourth quarter of 2008 and 20.08% from 103.50 in the second quarter of 2007. * The sector was hurt from consolidation and downsizing (1) Converting mainframe and mini-based systems to client/server LANs. (2) To reduce equipment and associated costs by switching to a less-expensive system. (jargon) downsizing in the financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. sector. * Vacancy rates climbed sharply and are now at 15.2%. * In the first quarter, 12.3 million square feet of office space was completed, with vacancy rates of 50-60% compared to 30-40% between 2007 and 2008. Nationally rents dropped 2.3%. BIG CRE Index - First Quarter 2009 [TABLE OMITTED] About The BIG CRE Lending Index The baseline values of BIG's CRE Index reflect the relative strength (or weakness) of each sector to the overall average beginning in the second quarter of 2007. Each quarter, the percentage change in the BIG CRE Index takes into account both macro economic factors, as well as specific probabilities of default in each category. These factors include (but are not limited to) employment, income, rents, vacancy and absorption rates. Movements of BIG's CRE Index are expressed as percent changes, rather than as changes in index points. Point changes are affected by the level of the BIG CRE Index in relation to the baseline period, whereas percentage changes are not. BIG's CRE Index incorporates both historical averages (short and long term), as well as forward projections. For more information about the BIG CRE Index or BIG's Loan Pricing Model, contact Kim Jackson, 415.399.5800, or kjackson@bancinvestment.com. About Banc Investment Group Banc Investment Group (BIG) was founded in 2002 and is a wholly-owned subsidiary of Pacific Coast Bankers' Bancshares (PCBB PCBB Phil Collins Big Band ). BIG is a registered broker-dealer and a member of FINRA FINRA Financial Industry Regulatory Authority (formerly Securities Industry Regulatory Authority) and SIPC (Simply Interactive PC) An earlier umbrella term from Microsoft and Intel for a PC that works like a home appliance. For example, it has a sealed case, uses external connectors for expansion and boots in just a couple of seconds. , and regulated by the Securities and Exchange Commission. BIG provides independent bankers across the country with capital markets solutions and consulting expertise to maximize performance and minimize risk. For information, call 877.777.0412, or www.bancinvestment.com. All securities are offered through Banc Investment Group. |
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