MNC offers building loans -- for the right projects Bank's CEO outlines a cautious stance


The commercial real estate market might still be in the tank, especially in downtown Baltimore, but Frank P. Bramble, chief executive of MNC Financial Inc., has a message for the business community: MNC is looking for a few good borrowers.

"As hard as it may be for many of you to believe, we are interested in lending money in both the real estate sector and the wholesale [business] sector," Mr. Bramble told a breakfast seminar in Towson sponsored by the accounting firm Kamanitz, Uhlfelder & Permison, P.A.

It was the first time Mr. Bramble had gone public to announce what he has been communicating to MNC's 7,000 employees in meetings over the past four months or so.

"I think there's a perception in the marketplace that MNC is out of the construction and commercial real estate lending business," he said. "That's not true."

What is true is that "the day of what I call the 'what-made-America-great' loan is gone," he said, referring to loans secured merely by the good name of the borrower and the instincts of the loan officer.

Instead, the company's two main banks, American Security and Maryland National, will be looking for small -- about $5 million -- projects secured with preleasing contracts or projects built to suit a major tenant.

"You're not going to see us do a lot of office [buildings] unless we are confident that the occupancy rates are going to be high," he said after the seminar.

Much of the company's real estate lending will be to medium-sized companies that find they have real estate needs and not to developers seeking tenants.

The cautious stance, he said, is partly a result of the company's bad experience with the real estate market in the past two years, a period that saw MNC's portfolio of troubled loans grow to $1.8 billion before declining to $1.6 billion in the first quarter of this year. The company had $16.9 billion in assets at the end of March.

The wariness also results from the few signs of improvement the region's commercial real estate market has shown for the near term, Mr. Bramble said. The company is beginning to see improvement in Washington and Northern Virginia, he said, partly because of the continued expansion of the federal government's office use.

South Charles Realty, the MNC unit charged with resolving the company's troubled loan and real estate portfolio, is getting more bids for its foreclosed real estate from outside the region, he noted, and most of the interest is in Washington-area properties.

The company's best market for real estate now is northern Baltimore County, Mr. Bramble said.

"The toughest market for us . . . and as a native I hate to say this, is downtown Baltimore," he said. Baltimore's commercial vacancy rate climbed to 20 percent last year from a recent low of 12 percent in 1988, the Coldwell Banker Commercial Real Estate Group reported in its year-end survey.

"We'll need to see improvement in the national economy before anything happens in downtown Baltimore," Mr. Bramble said.

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