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Are Commercial Real Estate Lending Underwriting Standards Slipping?


Everyone who has anything to do with commercial real estate financing will tell you that, “there is a lot of money chasing deals” and there is the concern among many that underwriting standards are beginning to slip. Have we not learned our lessons from the recession?

Nik Chillar spent some time with me at the CREFC West Coast, High Yield Real Estate Finance Summit in Santa Monica in May 2014, explaining to me that there has been a fair amount of discipline in the market.

There are new lenders in the marketplace who are creating a little more competition and who are doing things to create more marketshare.

One of the advantages of attending a conference such as this is that you have the opportunity to listen, first hand to experts from the ratings agencies who are working very hard to be cognizant of the changes in the market and to “adapt their ratings levels as they see collateral quality underwriting parameters change”.

Nike feels that “there is good discipline in the market” and that gives him good comfort

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