Top commercial real estate loan producers
By Katie Kuehner-Hebert
The trick to being a successful commercial real estate lender is knowing which customers can weather storms, staying clear of the riskier speculative ventures and being flexible on pricing and terms—but not underwriting. That’s what several of last year’s most-productive commercial real estate lenders report about their success.
During the run-up to the real estate bust in south Florida, when numerous banks were loosening their credit standards to grow their portfolios, American National Bank in Oakland Park, Fla., stayed true to its prudent underwriting, says Amy Engelberg, the $227 million-asset bank’s chief lending officer.
“We weren’t consumed with the idea of building a branch network and the need to fuel that with excessive loan growth,” she says.
American National kept its leverage at 75 percent when other banks were stretching theirs to as much as 85 percent. The bank didn’t do cash-out deals because it wanted its borrowers “to have skin in the game alongside us.”
Perhaps most importantly, American National didn’t do residential; speculative; or acquisition, development and construction lending on land development—all areas that have “caused havoc” in the real estate market, Engelberg says.
As competition for commercial real estate loans ramps back up, pressure in pricing has increased. American National has reduced rates on existing loans to retain the business instead of having a customer refinance elsewhere at a lower rate. The bank also has been willing to offer 10-year loan terms, with pricing fixed for five years at a time to limit interest rate risk.
“Underwriting a real estate loan isn’t rocket science; it’s all driven by property cash flow,” Engelberg says. “We lend to borrowers who have been through a cycle or two of the real estate market and who weathered this latest downturn well.”
Katie Kuehner-Hebert is a writer in Running Springs, Calif.