During the recession, commercial real estate loans dried up as banks and other lenders dealt with the fallout from the financial crisis. Since then, an improving economy and stimulus measures taken by the Federal Reserve have helped to bolster commercial real estate lending across the country and reduce delinquency rates for these loans as well. As the drop in delinquency rates continues and allows more lending to take place, senior housing owners and operators that are interested in obtaining inexpensive capital for growth, acquisitions, or other needs should contact Chicago-based Cambridge Realty Capital to learn more about the many different lending and financingprograms that it offers.
The national rate for commercial real estate (CRE) loan delinquencies has been trending downward since 2010 and decreased to 2.2% in the first quarter of the year as an improving economy, increased rents, and higher occupancy rates led to additional property revenues that allowed an increasing number of landlords to avoid defaulting on their loans. Real estate values have also increased in many parts of the country and this has helped reduce the number of commercial properties that are underwater as well. However, while the nation’s overall delinquency rate decreased in the first quarter, there were still some pockets of the country where the exact opposite occurred and the delinquency rate increased instead.
Chicago’s Commercial Real Estate Loan Market Sees Mixed Results
In the Chicago area, the delinquency rate for bank loans on income producing properties increased from 4.5% in the fourth quarter of 2013, to 4.7% in the first quarter of this year. While analysts were disappointed to see this rate increase slightly, they are not overreacting to the news because at 4.7% the delinquency rate is still considerably lower than it was in 2011 when it stood at 7.7%, and at the start of 2013 when it was at 5.9%. Also, according to the New York based research firm, Trepp LLC, an increase in delinquency rates from the fourth-to-first quarters is not unusual for the Chicago area. For example, according to Trepp, there have been slight increases in the delinquency rate from the fourth-to-first quarters dating back to 2006. This could be due to seasonal volatility as this increase takes place at the start of each year, even as the delinquency rate in the area continues to trend downward during the rest of the year. Another reason analysts are not alarmed by the slight uptick in delinquency rates is because the amount of outstanding commercial real estate loans in the Chicago area increased by 1.3% in the first quarter to $45.3 billion. This indicates that lenders are continuing to originate loans and that the demand for loans in the area remains strong.
As the economy improves, delinquency rates should continue to fall across the nation and it would not be surprising if Chicago’s delinquency rates reversed their first quarter trajectory and fell during the rest of 2014 the same way it did in previous years. While interest rates remain low, senior housing participants seeking loans or other forms of financing should continue to look to the successful financing firm Cambridge Realty Capital for their funding needs.