subject: Commercial Real Estate Loans In Hawaii With 75% To 80% Loan To Values-hawaii Commercial Real Estate [print this page] Recently, we have seen the beginning signs of a more rational market in the commercial real estate industry. In the past four weeks, we have seen loan-to-value ratios and debt coverage ratios return to a more fair and balanced level. While these loans are available for better income-producing properties, at this point in the cycle, it signals to us a return to a more level playing field and a point in the cycle which we may see increased transactions activity.
Specifically, we are seeing loans done on improved property with strong income in place with loans at value ratios of 75% and debt coverage ratios back down to 1.25% on the mainland US. With reports of these deals now starting to close and coming in for the past few weeks, we are looking for signs of similar availability with our local banks. Safeway has an existing store very nearby that was not able to be enlarged, but does very high gross sales. Safeway is paying a price very close to top of the market, even prices that have not been seen in two or three years. At nearly $200 per square foot for the land, this will buoy land prices in the heart of Honolulu at least for the rest of this year. Many of us had thought that land prices would start to drop, but this single transaction shows a very motivated buyer with a known history for strong sales reinvesting in the heart of Honolulus population.
At this point in time, we are aware though our relationships of loans that will be offered for Hawaii properties. Last week, I even received a quote of up to 80% loan-to-value ratio. This will make a major difference in the numbers of potential buyers in the market place.
With lenders obtaining 25% equity investment before their debt investment, this seems like a safe bet for these lenders. Todays overall values are under written to tighter guidlines and will protect lenders adequately.
