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CREDIT CRUNCH CONTINUES; BANKS REJECT REAL ESTATE INVESTMENT; SLUMP CONTINUES IN COMMERCIAL CONSTRUCTION

 CREDIT CRUNCH CONTINUES; BANKS REJECT REAL ESTATE INVESTMENT;
 SLUMP CONTINUES IN COMMERCIAL CONSTRUCTION
 WASHINGTON, Aug. 4 /PRNewswire/ -- Banks continue to resist investment in commercial real estate projects despite efforts by federal regulators urging lenders to make more loans. "The credit crunch caused by the savings and loan debacle and the resulting slump in commercial construction continues," said a spokesman for Associated Builders and Contractors.
 In a letter to Rep. John LaFalce (D-N.Y.), chairman of the House Committee on Small Business, ABC Senior Vice President Charles E. Hawkins urged Congress to lift many of the "unrealistic real estate loan classification standards" which grew out of the 1989 Financial Institutions Reform, Recovery and Enforcement Act.
 Hawkins said contractors who are unable to finance their own projects are, in many instances, "excluded from commercial real estate projects." Hawkins said there is a "virtual absence" of private projects advertised for bid. "The bulk of construction projects are primarily for the government," he added.
 In the letter, Hawkins related the difficulties several ABC contractor members are experiencing across the country:
 -- Griffin Construction (nursing home contractor from Arkansas): After having four projects put indefinitely on hold due to lack of financing, the contractor financed the projects himself and then leased the facilities back to nursing home owners. Despite the great demand for long-term care facilities, the nursing home owners are unable to find any banks willing to back their projects. Griffin has discovered over the past year that the process of securing his own loans has increased substantially because banks now want a letter from the borrower's counsel verifying that the company is solvent.
 -- West Bank Construction Co. (builder and developer in New Jersey): Despite having several "triple A" rated tenants, a strong demand for housing and low vacancies in the Manhattan area, West Bank was unable to secure financing for a 288-unit rental development. The banks are unwilling to provide financing for renovations until the leases are signed and the tenants are moved in. The prospective tenants, however, will not consider moving in until the renovations are underway.
 -- Nashville, Tenn.: Lenders refuse to examine construction proposals of long-standing, financially sound developers. Contractors are unable to learn why banks are unwilling to consider backing these projects. Despite a strong demand for housing, any multiple housing developer or builder must rely on their own resources to finance projects. It is not uncommon for a builder to begin one house, receive a bid on it, then use that money to start a second house.
 ABC is a national construction association representing more than 16,000 construction and construction-related firms in 81 chapters across the United States.
 -0- 8/4/92
 /CONTACT: Dick Haas or Mike Henderson of Associated Builders and Contractors, 202-637-8800/ CO: Associated Builders and Contractors ST: District of Columbia IN: CST FIN SU:


DC-TW -- DC016 -- 6720 08/04/92 13:57 EDT
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Date:Aug 4, 1992
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