I just read an interesting article at: http://www.philly.com/inquirer/business/20091027_Capmark_s_bankruptcy_provides_a_template_for_the_future.html by Harold Brubaker. See below for the interesting part.
"Capmark, which has 585 of its 1,000 employees in Horsham, relied heavily on selling loans it had made into the secondary market. When that froze and property values fell, the company got stuck owing more to its own lenders than its loans were worth.
"It's a template that you will see multiply itself many times over over the next three years," said Matthew McManus, chairman of NAI BlueStone Real Estate Capital, a real estate investment bank in Philadelphia.
The problem for the industry is that between now and 2013, more than $2 trillion in commercial mortgages, which typically have a five- to 10-year term, will need to be refinanced, according to a July report by Richard Parkus, head of commercial mortgage-backed securities at Deutsche Bank AG. It is not turmoil in the capital markets that is causing the bottleneck, but rather the fact that properties are not worth enough to retire the old debt in a refinancing, Parkus said.
The value of commercial properties has fallen 40 percent from their peak in October 2007 through August, according the Moodys/REAL Commercial Property Price Index."
This scenario is purportedly going to repeat itself over the next 3 years with banks and lenders alike. I suppose we are in for a long bumpy ride.
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Commercial Real Estate Defaluts / Bankruptsies
Posted by Brandon Koplin in Commercial Mortgage, Commercial real estate default, Commercial real estate forclosureI just read an interesting article at: http://www.philly.com/inquirer/business/20091027_Capmark_s_bankruptcy_provides_a_template_for_the_future.html by Harold Brubaker. See below for the interesting part.
"Capmark, which has 585 of its 1,000 employees in Horsham, relied heavily on selling loans it had made into the secondary market. When that froze and property values fell, the company got stuck owing more to its own lenders than its loans were worth.
"It's a template that you will see multiply itself many times over over the next three years," said Matthew McManus, chairman of NAI BlueStone Real Estate Capital, a real estate investment bank in Philadelphia.
The problem for the industry is that between now and 2013, more than $2 trillion in commercial mortgages, which typically have a five- to 10-year term, will need to be refinanced, according to a July report by Richard Parkus, head of commercial mortgage-backed securities at Deutsche Bank AG. It is not turmoil in the capital markets that is causing the bottleneck, but rather the fact that properties are not worth enough to retire the old debt in a refinancing, Parkus said.
The value of commercial properties has fallen 40 percent from their peak in October 2007 through August, according the Moodys/REAL Commercial Property Price Index."
This scenario is purportedly going to repeat itself over the next 3 years with banks and lenders alike. I suppose we are in for a long bumpy ride.
