A case study for what can go wrong with commercial real estate is on display across northern Boulder County, where sales have dropped as much as 40 percent in recent years, stalling projects and leaving empty stretches of land across wide swaths around Longmont and Mead.
Most of the bad-loan bets CoBiz Financial Inc. reported last year are exemplified by one $4.6 million Boulder County land purchase for a housing development.
CoBiz loaned the buyer $3 million in September 2005 — before the housing market tanked, as is the case with virtually all of the bad loans. The owner even contributed a significant piece of equity. But because home sales sank over a long planning and permitting period, so did the value: At $2.5 million, the project went belly up.
Lessons learned?
CoBiz will require even more equity at “the top” of the market and require deeper stress tests of borrowers’ finances, said chief executive Jon Lorenz.
By Miles Moffeit, The Denver Post
