CRE Construction Stress Testing – A Multi-phased Approach

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2023 is already proving to be as challenging as 2022 in terms of managing credit risk.  CEIS recognizes this and has been working on improving ways to help manage these emerging risks though two new services designed to help identify order amongst the chaos.

#1. The first offering is tied to the CEIS loan review process.  CEIS can now provide a Micro Stress Test on the individual loans under review.  This micro stress testing will focus on the impacts of inflation on the DSCR and also evaluate potential stress on collateral values using projected Cap Rates to assess valuation changes based on the property segment and regional location.  This is an added value service and requires no additional work on your part as it utilizes the data already gathered within the current loan review being conducted.

#2. The second, and very exciting offering is a redesigned Stress Test targeted specifically for the CRE Construction Segment.  This new methodology provides a multi-stage, in-depth approach starting from the construction phase through permanent financing including all aspects in between.  CEIS designed this approach in response to numerous client requests for a deeper more developed stress testing for a segment that that traditionally experiences more volatility than the permanent loan model for CRE transactions.

Throughout the engagement CEIS’ team of professionals will work with bank personnel to customize the Stress Test factors to meet the specific aspects of your unique portfolio.  The resulting reports are designed to provide actionable insights to permit your leadership team to better identify and manage the risk within your portfolio.

Client Benefits:

  • Forward looking to identify strengths and weaknesses
  • Transaction- to segment-level analysis
  • Detailed data per exposure included in the stress test
  • Customizable to client-specific requests
  • Detailed reporting enabling actionable insights for management and the BOD
  • Customizable, multivariable approach
  • Multiformat results• Project vs. Completion; Moderate vs. Severe stress

CEIS’ goal is to develop and provide essential tools for our clients and strongly believe these two new services meet those core value goals.

Contact us to discuss if our enhanced CRE Construction Stress Testing may be beneficial to your Institution.

888-967-7380 • Justin Hill @ [email protected] or Mr. Dean Giglio @ [email protected]