Jeffrey Packard, an assistant vice president with life insurance company John Hancock, which does about $2 billion in commercial mortgage lending, has been waiting for this moment for four years.
Loans were being made that Packard
firm could never justify.
"The conduits created a situation where the competitive bidding for deals got really out of hand," he
But with the recent developments stemming from the subprime meltdown (See story on p. 38), the gap
has narrowed, Packard
, for example, hasn't changed its lending targets, Packard
says, adding that he
anticipates closing 10 percent to 20 percent more transactions because of the CMBS turmoil."We're definitely seeing more deals, and depending on how things shake out, we would expect to see more business for our company and industrywide for portfolio lenders," he
DuMars estimates that portfolio lenders are now seeing 20 to 25 packages when they were used to just 5 to 10 packages."In my opinion, this environment is a good cherry-picking opportunity," he
, for example, is still interested in providing debt for retail properties, but Packard
admits the firm has a higher level of vigilance when reviewing retail deals."We do have some concerns on retail, and they relate primarily to what's happening in the housing market," Packard
says.In particular, he
expects increased foreclosure rates and a weak housing market to put a damper on consumer spending.
Their loans rarely included riskier terms such as 10-year interest-only loans and debt service coverage below 1.0 x. "We've maintained a pretty good discipline over the years, so now we're just doing what we've always done," Packard
But, volatility in the bond market has pushed up the cost of commercial real estate debt â€" not only for CMBS loans, but also for whole loans.
Pricing on John Hancock's
mortgage loans had increased as of mid-August, according to Packard
, but he
declined to say by how much."Our pricing has trended up along with everyone else in the industry," he