BofA’s Ron Sturzenegger Is Banking on a Refinancing Boom

Thanks to the so-called “death of Wall Street,” commercial banks have become one of the only sources of real estate financing left standing in 2009. One of the key players figures to be Charlotte-based Bank of America, which in the last four years has swallowed up Fleet Bank, LaSalle Bank and Merrill Lynch to become the largest banking institution in the United States with more than $1 trillion in assets.

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Leading the bank’s charge is 10-year veteran Ron Sturzenegger, 49, head of global real estate investment banking, lodging and gaming at Banc of America Securities. Previously, he spent 12 years on Wall Street with Morgan Stanley.

When he joined Bank of America a decade ago, Sturzenegger was a pioneer in melding Wall Street with Main Street banking, but he has been around long enough to see investment banks and commercial banks intertwine. “Our clients want a single delivery, or a universal bank model,” says Sturzenegger.

Many Bank of America real estate clients are faced with refinancing mortgages in a tight credit market. “We’ve bought a lot of banks that loan money on real estate, so therefore we have a big inventory of real estate loans.” Those loans will need to be renegotiated and refinanced in the coming years.

Though Sturzenegger would not commit to an estimate for Bank of America’s lending volume in 2009, the borrowing window is open. But banks alone will not be capable of filling the void left by the collapse of the commercial mortgage-backed securities (CMBS) market, which saw domestic issuance drop from $230 billion in 2007 to just $12 billion in 2008.

“There is too much need for debt to be solved only with bank lending. Our balance sheets would be overwhelmed at the billions of dollars that need to get refinanced in the next several years, if we don’t get some kind of a distributable debt market again.”

In 2009, $171 billion in commercial loans held by non-bank lenders and investors are coming due. Of that total, $53 billion is held in CMBS and other asset-backed securities.

This year and next could be the calm before the storm. “The bank market can take a lot of the refinancing that probably comes up in 2009 and 2010,” emphasizes Sturzenegger, “but by 2011 or 2012 we better have a distributable market, or there will be a challenge.”


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