Markets have yet to see the full implications of the US banking crisis and the meltdown could hit commercial real estate, according to Franklin Templeton Investments Chief Executive Officer Jenny Johnson.
(Bloomberg) — Markets have yet to see the full implications of the US banking crisis and the meltdown could hit commercial real estate, according to Franklin Templeton Investments Chief Executive Officer Jenny Johnson.
Regional, community and small banks account for 25% of the lending in the sector and a retreat will likely impact those seeking mid-project refinance, she told Francine Lacqua in a Bloomberg Television interview at JPMorgan Chase & Co.’s Global Annual Markets Conference in Paris on Thursday.
“They need to pull back a little bit,” Johnson said.
With the resetting of some rates as debt becomes due or as new construction funding is needed, “they’re not going to be there at the same level,” she added.
Read more: Franklin Templeton’s CEO Sees Fed Stoking Private Credit Demand
Retail malls and office will have a hard time, she said, adding there’s still confidence in other areas such as housing and industrial real estate.
There shouldn’t be more banking turmoil, Johnson said, while queried about the potential for more failures.
“Banking is a game of confidence,” she said.
“First Republic was a great stable bank and suddenly there came a wave of concern. So, hopefully that’s calmed down and we won’t see it.”
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