There are many news reports about the status of the commercial real estate mortage market – we have even reported on them here on Real Estate Jokers – The Mortgage Crisis May Have a Second Act? – but what is uncertain is exactly how much debt is on the books, and how much is going to mature or come due as the five year notes expire? I read an interesting article on Zero Hedge a while back that estimated the total commercial debt at over $1 trillion: Read more of this article »
Bernanke’s speech today before a group of bank regualtors in Chicago -
“A weak commercial real estate market is a near-term threat,” Bernanke said. “Financing commercial real estate is a problem now; because the market for commercial mortgage-backed securities is closed” he said. That’s the market in which real estate loans used to be packaged and sold to bond investors. “Because that market is not available now,” Bernanke said “real estate developers can’t refinance loans or obtain lending for new construction.”
So now that the most important figure concerning monetary policy has declared the commercial market as “weak” – can we all get back to business and move forward at these new prices?
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Just joking. But honestly, we all need to keep our collective heads up, and continue to try and move forward. We cannot keep dwelling on how the the market was 3-5 years ago, and how good business was 3-5 years ago…etc, etc. I keep telling people, “commercial real estate is different than residential because leases are going to end, people will be forced to renew, move to larger building, smaller buliding, cheaper building, etc. It is inevitable. Business will continue forward. Industry cannot stand still. If an industry is overrun with competitors, some with fail, which makes more business for those who survive. Then those companies will need more space…etc…etc..etc. Be positive and Lets do some business people !!
There have been a few of these news stories floating around lately…this one seemed quite informative. – Tim –
The Federal Reserve Board on Friday announced that, starting in June, commercial mortgage-backed securities (CMBS) and securities backed by insurance premiums finance loans will be eligible collateral under the Term Asset-Backed Securities Loan Facility (TALF).
The CMBS market came to a standstill in mid-2008. The inclusion of CMBS as eligible collateral for TALF loans will help prevent defaults on economically Read more of this article »
This flyer says it all with the commentary about “less of this please, and more of this”.
I know my reasoning for moving back to the Daytona Beach area was to escape the concrete jungle and sprawling spaghetti of freeway interchanges. This is an important event that will help shape the future of our city. We need young professionals to attend this event and be heard – the same old people tend to be involved with local government – and it needs to be a more representative cross sample of the acutaly residents of Daytona Beach!!
Everyone has been conditioned to actually believe there are tons of deals to be had out there for nothing…It seems like everyone has a story about a brother-in-law, cousin, best friend’s ex-roomate, and upstairs neighbor that has purchased, and “flipped”(how much does everyone hate that term now…haha) some real estate with zero money. They love to tell about the house they bought on a 100% mortgage, remodeled on a 0% credit line at the local home improvement warehouse, and sold for a $20k rip.
Well, at the base of everyone one of these stories is a kernel of truth, and if the base truth is 50% as good as the final story then it is reasonable to believe that some of these people actually did make some money on real estate investments with very little of their own hard cash. Read more of this article »
One thing for sure – CoStar is good for reports like this – Tim
Falling Prices Hindering Already-Difficult Ability To Refinance Loans on Time
An uptick in both the number and average loan size of new defaults resulted in a one-quarter point climb in March CMBS delinquencies to end the month at 1.53%, and there are significant indicators that point to record climb in defaults in April as well, according to Fitch Ratings.
So you own a television and a computer – and every time you turn one or both of them on, they instantly spew forth ideas that you should sit tight and keep leasing space for your business. Vacancy rates are on the rise, rents are dropping, banks are foreclosing on properties, distress sales are on the rise still, etc, etc. Well maybe your computer doesn’t “spew” this info – but your fax machine probably does.
The basic point is in order to by in business, you have to have space to conduct that business. Like it or not, you unless you are drop shipping infant toys you sell on ebay, you most likely need a traditional space to operate your business. This could be an office, a retail store, or a manufacturing or industrial space for your going concern. Rent is expensive, possibly the most expensive piece of your overhead after labor and of course the cost of goods sold. While there are no guarantees and I certainly have no crystal ball here in my office, There is a good chance of you being able to recapture Read more of this article »
As we all know, unlike residential mortgages, commercial paper is ammortized over a longer period of 20-30 years, but they have terms or balloon payment dates. Most popular commercial loans are for 5 year terms. If you calculate backwards and figure when the commercial market was at its peak, from mid-2006 to mid-2007, those notes will be coming due in 2010-2011.
It is foreseeable that the financing in place on that commercial property will be difficult to renew, Read more of this article »
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Everyone has been conditioned to actually believe there are tons of deals to be had out there for nothing…It seems like everyone has a story about a brother-in-law, cousin, best friend’s ex-roomate, and upstairs neighbor that has purchased, and “flipped”(how much does everyone hate that term now…haha) some real estate with zero money. They love to tell about the house they bought on a 100% mortgage, remodeled on a 0% credit line at the local home improvement warehouse, and sold for a $20k rip.
by Tim Davis
