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By: Staff Reporter
Lenders are expected to ration their lending to the commercial property sector, after slashing their exposures by more than $16 billion in the wake of the global financial crisis.
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According to a report in The Australian Financial Review, values in the listed property sector have fallen more than 20 per cent from their peak just over a year ago.
In response, many of the majors have reduced their overall commercial property related loan book.
NAB reduced its commercial loan book by $3.1 billion – or 4 per cent since March 2009 – while CBA reduced its commercial property lending book by $1.9 billion in the six months to December.
Westpac reduced its commercial property exposures by $10 billion in the 12 months to September last year, to just below $47 billion and ANZ sliced $3.4 billion off its commercial property exposure in the second half of 2009.
CBA’s chief credit officer Ross Griffiths told the paper that the bank was forced to reduce its exposure after wholesale borrowers such as real estate investment trusts raised equity specifically to reduce debt loads.
“Any new commercial property exposure is expected to be of higher quality, meaning lower loan to value ratio, and good servicing cover,” Mr Griffiths said.
NAB property finance general manager Andrew Balzan said he expects banks to increase their appetite for commercial loans when the sector starts to recover.
