The baseball credo "hit 'em where they ain't" might be the best way to describe some bankers' unlikely advice that now is the time to wade into commercial real estate lending.

Like a batter aiming to hit the ball away from opponents, the contrarians argue, bankers should take note of the crowding field of players in the commercial and industrial market. That trend leaves CRE wide open for those that are able to lend — and willing to challenge conventional wisdom.

"There are only so many seats at the table for C&I lending," said John Tranter, the president and chief executive at Gulfstream Business Bank in Stuart, Fla.

Though 80% of its portfolio is commercial and industrial, Gulfstream is taking a serious look at commercial real estate, simply because it is one of the few Florida banks in a position to do so.

"If you are under the regulatory caps, you should be doing more CRE," Tranter said. "We're certainly looking at it. Your pricing power is going to be phenomenal."

Regulators are keeping a close eye on bank portfolios where commercial property loans make up more than 300% of total risk-based capital, excluding loans where the borrower owns the office or plant it occupies.

There is even more scrutiny of construction and land development loans, where regulators' concerns grow if a portfolio tops 100% of risk-based capital. Some banks are having to purge CRE credits from their books because of various regulatory orders.

Tim O'Brien, a managing partner at Sandler O'Neill & Partners LP, estimated that 20% to 40% of all U.S. banks are at or above those levels, creating opportunities for those who are below them.

"There is still room for CRE loans, including those involving investors" that buy properties, he said. "I am even hearing talk that some are making construction loans again."

Granted, there may not be overwhelming demand for CRE loans right now. Several observers said, however, that banks with the capital strength and willingness to do CRE loans can be selective in choosing their customers and control terms simply because of less competition. C&I, in contrast, is susceptible to competitive pricing and loosened credit standards, some said.

Tranter, whose $573.3 million-asset bank has long specialized in business lending, estimated that banks that shift to C&I from CRE are taking a 40% hit to their prospective earning assets as a result of the move — a harsh reduction in profit potential for banks still trying to recover from the financial crisis.

"The quality of CRE opportunities, rather than the quantity, is going to be robust," said Steven Sandler, the CEO of Crosswind Capital LLC, which buys distressed assets. "There is a slow and steady business."

D. Anthony Plath, a finance professor at the University of North Carolina at Charlotte, said regional and big banks would be the most likely beneficiaries, particularly those that have already left the Troubled Asset Relief Program and have small CRE concentrations. Bank of America Corp. and Citigroup Inc. stand out as possible leaders in CRE lending, he said.

BB&T Corp., despite having roughly a third of its loan book tied to CRE, is another possibility, given its capital strength.

Sandler said foreign banks such as Deutsche Bank AG and Barclays PLC are also in a position to capture CRE business. "The bulk of opportunity will go to larger institutions that have solid platforms and balance sheet strength."

A number of big players are scaling back, providing an entree for others.

Michael Neal, the chairman of GE Capital Services Inc., said last month that the General Electric Co. unit would halve its $80 billion CRE portfolio over time.

"When you talk about what we learned, one is that with small operations at a distance you can't earn very much," he said at a Sanford C. Bernstein conference in New York.

Still, he said commercial real estate market conditions "are largely through the free fall" and that he expects "better days ahead."

Commercial realty has its share of hits and misses when it comes to property types, experts warned. Tranter said it would be unwise to re-enter construction loans, particularly residential development. He said better opportunities await in shopping centers that have strong anchor tenants and, in the longer term, apartment communities.

Sandler said refinancing and loans for acquisitions "are going to be the hot spots" for CRE lending, while "new development is going to be very dormant for a while across all product types."

There are several obstacles that will constrain banks' push into CRE right now, observers said.

Sandler said that the market for commercial mortgage-backed securities, while improved from the lockdown in 2008, is "nowhere near" the volumes seen before things seized up. "There is still uncertainty in the CMBS market on how far losses will go," he said. "That's a block to robust trading, so I would characterize trading now as moderated and constrained."

Another issue is lingering uncertainty about real estate values in certain markets.

Tranter conceded that valuation issues in Florida remain a major consideration as he evaluates borrowers who would be "willing to pay anything" for a 70% loan-to-value loan. Construction and development "pricing is still unclear," he said, "as appraisals continue to come in below expectations."

Plath said that, while CRE deals could be possible in relatively strong markets like North Carolina, he doubted there would be much activity in states such as Florida and California, where valuations have not yet firmed. Banks that are willing to make loans now also have a chance to win over a client who could, over time, move over deposits and take advantage of fee-based services.

"If you have the right piece of property in the right market, it is a lot easier," Plath said. "If so, you can cherry pick a market."

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