* CMBS default rate could hit 3.5 percent by year-end
* Bank default rate could reach 4.8 percent in 2011
* Commercial real estate prices may fall 35-45 pct from 07 peak
By Ilaina Jonas
NEW YORK, March 26 (Reuters) – The new federal programs to aid the U.S. financial markets will likely not fend off the impending wave of foreclosures on U.S. commercial real estate loans, experts said.
U.S. Treasury Department officials unveiled this week more specifics of a program that will enable the federal government to help private buyers purchase toxic loans and asset-backed securities, including commercial mortgage-backed securities (CMBS).
While there is much public debate about whether it will get the banking industry back on its feet, many real estate experts said that it won’t prevent an approaching wave of defaults of current loans in the U.S. commercial real estate sector
”This isn’t designed to head off foreclosures,” said Thomas Barrack Jr, head of real estate private equity firm Colony Capital, which has $36 billion of assets under management. “This is designed to start the banks lending.”
The U.S. commercial real estate boom that started around 2004 and peaked in 2007 was fueled by cheap debt. Banks and other lenders were often willing to lend up to 90 percent or more of the purchase price. The loans often assumed optimistic rent growth and rising occupancies in the future.
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not surprising…residential and commercial are linked but the media doesn’t like to report on businesses hurting as much as people. Last I checked businesses are owned and operated by people.
Has anyone had success in commercial mod negotiations? We have done one. But it
was a hard money investor, so basically
just rolled over principle on new terms.
Just curious.
Yes. It sounds like they took advantage of your situation. Many of these hard money lenders and just predatory sharks that want your property.