According to a recent column in The Motley Fool, foreign banks and insurance companies appear ready to pick up the commercial real estate lending business that Wall Street banks are beginning to leave on the table due to nervousness brought on by residential housing market problems. However, most developers now need to provide about 25 percent of their equity financing, an increase over the 10-15 percent required before credit controls tightened.

Difficulties in mortgage-securitized markets have given balance-sheet lenders more opportunity to compete, according to Matthew Galligan, managing director of the U.S. Property Finance division of Bank of Ireland PLC.

The bank-which wants to acquire more U.S. assets for its balance sheet and is presently concentrating on the Boston to Washington, D.C. corridor-set up its property business in July and expects to generate $1 billion in business next year. Thus far, it has completed one deal and is committed to two others.

Galligan points out that even if the commercial market drops, his bank will be protected because its loan transactions have a low loan-to-value ratio, meaning that the terms B of I is willing to underwrite today are much more conservative than they were a year ago.

Tim Zietara is managing director at CIT Commercial Real Estate, a division of CIT Group Inc., considered a middle-market lender. He reports that most borrowers seem willing to pay a premium to a lender that can close the transaction, rather than simply going for the lowest quote. He said his firm is also seizing opportunities from balance-sheet lending.

Zietara, while observing that his bank is bullish on the multifamily and office commercial real estate sectors, didn’t specify how many deals CIT has in the works and added that the amount of equity his firm is requiring from developers “is very deal-specific.”

Tags: commercial lending, commercial mortgages, commercial real estate financine, commercial real estate loans

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