Commercial real estate losses could reach 45 percent next year according to an internal presentation at The Federal Reserve Bank.As reported in The Wall Street Journal (subscription required), while not the central bank's formal opinion, the presentation by Atlanta Fed real estate expert, K.C. Conway, paints a bleak picture of sliding real estate values, increasing commercial real estate loan defaults and enormous amount of debt that will need to be re-financed in the next few years.
Banks have been slow to take losses on their commercial real estate loan portfolios because their balance sheets still have not recovered from their housing loan related losses. "Extend and pretend" has been the philosophy of some banks whose primary focus is capital preservation and avoiding enforcement actions by regulators.
I have personally seen three bank commercial real estate loans in recent weeks where the banks are in trouble on construction loans and first trust deeds gone sour. I'm working on sale leaseback solutions on two of the three that will necessitate the banks taking a significant discount on the loans. On the third, the value of the property is so low relative to the loan balance, it's not clear where the solution lies.
Need help finding the right lender or telling your story the right way for your California business? Read "Matchmaking for Business Loans" and give me a call!
Tags : commercial real estate loans , commercial real estate , bank failures , real estate bridge loans , private money loans
No comments:
Post a Comment