Commercial Real Estate Implosion Is Imminent
Editor’s Note: This has been talked about for some time as the next “shoe” to drop in this finanical crisis. I have already seen lobbying efforts being put in place to get a bailout package for the commercial real estate industry to refinance these notes coming due into a long-term fixed rate mortgage. According to this article, $30 billion in commercial loans will come due in 2009-10.
News:
Real estate investment trusts (REITs) are leveraged-financed property investments that pervade the commercial real estate market. With the real estate bubble financed by Greenspan’s artificially easy credit policies, these REITs witnessed surging revenues as property values soared. With the collapse of the housing bubble, property values are in free-fall, but unlike residential real estate, commercial real estate hasn’t witnessed mass defaults yet.