The Big Apple’s Lending Landscape Evolves
New York City’s lending landscape has shifted “significantly” compared to last year, reported Credifi, New York.
The company’s first-quarter Lending Spotlight: New York City Edition report noted a shrinking role played in the first quarter by big national banks, which had previously consistently dominated the top 20 lenders.
“In the first quarter, lenders such as Wells Fargo (the No. 2 commercial real estate lender in New York City in 2017), Morgan Stanley (No. 4 in 2017) and Citigroup (No. 8 in 2017) saw significant declines in their New York City origination in the Big Apple, leaving JPMorgan Chase and Goldman Sachs as the only two national banks among the top 20 lenders,” the report said.
CrediFi said as U.S. national banks lent less in the city, foreign banks moved up to the top spots. Foreign banks were responsible for one-third of loans on New York commercial properties originated by the top 20 lenders in the first quarter.
Half of the six foreign banks in the top 20 are German banks–Sparkassenverband Baden-Wuerttemberg, Deutsche Bank and Aareal Bank–two are Canadian (TD Bank and Royal Bank of Canada) and one, HSBC, is British. One significant change among foreign-based lenders is the absence of France’s Natixis from the top 20. Natixis is a subsidiary of French banking group BPCE, one of the top 10 lenders in New York last year.
New York-area lenders including New York Community Bank and Signature Bank as well as M&T Bank, Investors Bank and Valley National Bank constituted the second-largest category of lenders, the report said.
“Another big change in the first quarter is that, after an extended absence, we are again seeing insurance companies originating substantial commercial real estate loans in New York City,” Credifi said. “Despite being among New York City’s biggest commercial real estate lenders in multiple quarters of 2016, insurance providers were not among the top 10 originators in a single quarter of 2017.” But Prudential originated more than $600 million and MetLife originated more than $500 million in New York during 2018’s first quarter, about half of which went toward Rockwood Capital’s 2 Grand Central Tower, a 44-story office tower on E. 45th Street near Grand Central Station.
“Though the lending trend has changed dramatically, that shift may turn out to be short-lived,” the report said. “Our preliminary findings indicate that Wells Fargo’s originations for New York City commercial properties have increased significantly over first-quarter levels and are already above $500 million for the second quarter to date.”
Another factor that could indicate the change is a temporary blip rather than a long-term change in lending patterns is that some lenders that have moved up to the top 10 or dropped off it are institutions that typically originate very few, very large loans. “This creates room for volatility, with massive differences in loan amount for quarters in which those few loans (or that single loan) were originated compared with periods they weren’t,” Credifi noted.
