Toronto-Dominion Bank has Significant Exposure U.S. Real Estate Loans
Toronto-Dominion Bank has about $19.5 billion in troubled U.S. commercial real estate loans, which is significantly higher than many of its investors believe, a new report suggests by Toronto-based Hamilton Capital Partners.
Canada’s second-largest bank disclosed to investors recently it had about $12 billion in U.S. commercial real estate exposure.
The U.S. commercial real estate sector’s continuing deterioration is fuelling concerns about the banking industry and the recovery of the U.S. economy.
Commercial real estate is the second-biggest loan category in the U.S. banking system after residential mortgages, accounting for about $1.9-trillion of the total $7.6-trillion loans.
Commercial real estate includes owner-occupied properties such as factories, income-producing properties such as office buildings, hotels and malls, apartment buildings and other multi-family properties, and construction.
Commercial Real Estate, Boom or Bust?
With many regional and small banks vulnerable to the deteriorating performance of commercial real estate loans, banks are continuing to tighten lending standards and bank loans have continued to contract.
While residential home sales and construction have picked up in recent months, commercial real estate activity continued to fall markedly in most areas of the U.S. because of deteriorating fundamentals, including declining occupancy and rental rates, and tight credit conditions for businesses. More commercial real estate loans are at risk of defaults.
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