Posted on 07/09/2009 5:09:52 PM PDT by FromLori
.S. lawmakers rang alarm bells about the troubled commercial real estate industry, which has been walloped by the credit crunch and an implosion of property values.
"The commercial real estate time bomb is ticking," Joint Economic Committee Chairman Rep. Carolyn Maloney, D-N.Y., said in opening remarks to a hearing before her panel Thursday.
U.S. Sen. Sam Brownback, R-Kansas, said he was distressed about the situation the industry is facing.
Banks have yanked back on lending to developers of shopping malls, apartment complexes, hotels and office parks. Meanwhile, the securitization market - a key source of funding for the commercial real estate industry - has been in a deep freeze since last year.
The situation is fueling concerns that property developers won't be able to refinance roughly $400 billion in commercial real estate debt coming due this year. Property values have plunged about 24% since their peak in 2007, further hampering developers' ability to obtain refinancings or loan extensions.
General Growth Properties, one of the largest U.S. shopping mall owners, filed for bankruptcy protection along with 158 of its properties in April, citing lack of financing.
A wave of defaults of commercial real estate loans would deal a blow to the already weakened banking industry. The U.S. commercial real estate market is roughly $6.7 trillion in size and is underpinned by about $3.5 trillion of debt.
The Federal Reserve has taken steps to get lending flowing to the industry. On June 16, it announced it would accept as collateral new issuance of commercial mortgage-backed securities as part of its emergency program to thaw the securitization market. As early as next week, the Fed is expected to extend that to existing, or "legacy", CMBS already held by investors.
The commercial real estate industry believes these steps will help unleash lending to property
(Excerpt) Read more at nasdaq.com ...
I fear another leg down for the economy and stock market.
We have idiots, children, and treasonous perps at the controls.
Some days I feel happy that the Democrats control all branches of govt so when Social Sec and Medicare fail, they can receive the blame.
Yes I think Depression with unemployment really at 20% already but the only thing is we all have to go down with those freaks that is what angers me so.
Taxpayers get to prop up another section of the economy.
Wonderful.
Oh yes, hordes of the unemployed will descend upon the malls and boutiques next quarter, or maybe the quarter after. The commercial real estate market is going to take a major hit. Too many empty properties to get the rent back up. Toll little consumerism to drive the engine.
parsy, the glum
I think this is the other shoe that Glenn Beck said was gonna drop.
Blame goes back and forth, as predictable as a pendulum. Both parties keep kicking the can down the road, refusing to tackle the Ponzi schemes they have built. If the Republicans get elected in ‘10, they might be on watch for the big blowup. Then it’ll swing back to the Dems.
Enough metaphors for you? Pendulums, cans down the road, blow-ups, and building Ponzi schemes.
As ever, the Congress is a year late and a trillion bucks short.
If these guys ever learn anything about finance, it will be a wonder akin to building the pyramids of Egypt.
Well, gee, if there are empty offices and shopping centers, then why would banks be itching to finance new projects? There are several newer shopping centers (< 2 years) around my way that are half full and another couple under construction. Why those projects should proceed in this environment is beyond me.
There have been numerous threads on Free Republic regarding the woes facing commercial real estate, as Freepers have been sounding the alarm for at least a year.
“I think this is the other shoe that Glenn Beck said was gonna drop.”
Commercial real estate will not rebound because under this Marxist thug, our economy is being strangled. Later this year, and next year, some 1.5 trillion in residential ARMS
are coming due. Good luck, America!!
” Why those projects should proceed in this environment is beyond me.”
Reason: They either proceed, or lose millions in land value, and permits.
“No down, no interest, pick your payment, negative amoritiztion, ARM” loans are good for the economy and help out the oppressed minorities that the evil Republicans don’t care about.
(was that sarcastic enuff?)
Are you hiding Obama’s speechwriter in your bathroom?? :-)
I may have to get a job writing his speeches. Easy. Big money.
Just have to sell my soul.
“Just have to sell my soul”
That is the hard part.
Keep your soul, and buy a dog ;-)
bingo. We are witnessing amateur hour at its worst.
Oh no!
You mean there won't be any shops to loot when the food riots begin?
Somebody is gonna be real mad about that and they may come and visit you. (Be sure to have some treats on hand, ahem)
Maybe the Family Dollar Store and Walmart. People don’t seem to riot too much in Arkansas. Too many of us are armed.
parsy, the Arkansan
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