So now that our economy has begun to re-shape itself since the credit crisis in the 2008 we are beginning to see the light at the end of the tunnel. Right? Consumer confidence has increased, the markets are picking up and the DOW Jones is almost back to 10,000 and S&P 1050. Think again.
The ever important commercial real estate market could be the next, biggest piece to bring our economy back to familiar waters. Many major commercial buildings need refinancing yet banks are skeptical of the loans because of the exposure they warrant.
Daniel Tishman, CEO of Tishman Construction Corp states, "..there's a total amount of $3.4 trillion in commercial loans that needs refinancing, and many local banks are holding those loans. There are huge numbers of banks that could have problems (and face closings) going forward because of carrying these commercial loans."
TALF (Troubled Asset Loan Facility) is the implemented government program which provides financing to holders of asset-backed securities for CMBS is about to come to an end. The congressional oversight panel is scheduled to meet this Thursday to discuss the effectiveness of the program and plans for moving forward.
This program is ever so important as commercial property sales plunged 73% last year and hundreds of large properties are in default.
By Eric Gursky
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The recent increase of the Dow Jones and the S&P seemed to be a good indicator that the economy was turning around. I think that the threat of default on trillions of dollars of commercial real estate could have a major impact on the recover in a negative direction. I’m surprised this hasn’t been covered more in depth by major news.
ReplyDeleteBy: Stephen Barile
Agreeing with the above comment, I too am surprised that this issue hasn't been tackled by the media. Maybe its an issue the media doesn't want the public to hear about.
ReplyDelete