Nearly half (49%) of the respondents to the Turnaround Management Association's (TMA) distressed industries forecast think durable improvement in the economy is unlikely until at least the second half of 2010. About three out of ten think the worst is over, but nearly 20 percent suggest the economy has yet to hit rock bottom.Access to capital remains a big question for how the economy will fare in 2010 according to 52 percent of respondents.
Three out of four respondents think the commercial real estate industry will fare the worst in 2010 as debt matures and lenders remain reluctant to refinance.
"Overleveraged balance sheets are one of the primary causes of industry problems," said William K. Lenhart, CTP, a partner with BDO Consulting in New York. "In 2009, many lenders were more willing to 'extend and amend' terms so borrowers were not in default. It is unclear if these companies took this opportunity to improve operations, reduce expenses and sell off underperforming assets to reduce debt."
My own sources have referred to many commercial bank lender's actions in 2009 as more like "extend and pretend" or "delay and pray".
Happy new year? We'll see.
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Tags : Turnaround Management Association , TMA , extend and pretend , commercial real estate , bridge loans
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