We need some further opinions if anyone cares to weigh in.....

Commercial Real Estate loan secured by a number of individual buildings all right next to each other. Loan has been performing for a number of years. Market is stable and leases are in place. Over the last few years, some of the tenants have purchased the individual buildings they are using. We have released collateral based on a certain percentage of purchase prices.

There are two buildings left. The loan is ready to mature and we are looking to extend/renew. The last appraisal we have is over 3 years old and values the property with four buildings. We aren’t silly enough to divide the value by two, but it is rather obvious that we have enough collateral value left. We have copies of the updated leases. No new money will be advanced but the loan is at $260,000.

Is there any argument for not getting a new appraisal? Could we get away with an evaluation based on updating the income approach for updated leases and noting the sales prices of the two neighboring properties? It seems as though the guidelines allow flexibility, but on the other hand, we really aren’t holding an appraisal of the collateral that secures our loan.