Answer: badly. The Federal Reserve’s new rule on regulatory capital requirements for banks will be announced in the next couple of days.  It probably will mean less money for commercial real estate. The scope of this new rule will help the banks (by requiring them to hold more in reserve) but it could hurt the commercial real estate community:

  • less money will be available for investing in CMBS bonds, which will . . .
  • impact the demand for CMBS bonds, which will  . . .
  • mean fewer CMBS deals and  thus
  • less money available for borrowing in the commercial real estate sector

  This new rule comes from Section 939A of the Dodd-Frank Act. Clearly, lending secured by commercial real estate now is all about the equity: ownership will to have even more money in the project pocket.  And not borrowed money.  Real money. If you view it differently, or have a comment, please post it below.