Commercial Loan Workout Experts for Retail Projects
Here is an example of a real scenario of a Commercial Loan Workout that both parties benefited.
Mark Capaz, Real Estate Construction/Finance/Mezzanine Lending/Workouts
3825 Henderson Blvd. Suite 101
Tampa, FL 33629
Phone (813) 261-3888
mark@venturesolutionsllc.com
30 years experience in the Commercial Banking Industry
A great number of experts have placed the blame on the foreclosure crisis in America on the problems associated with mortgage backed securities. When the real estate markets decline, purchasers of these securities disappear and when foreclosures escalate, losses in mortgage backed securities run deep. This is a cycle that is difficult to get out of, that is, unless the government bails out the companies that purchase mortgage backed securities.
Experts in the field of real estate commonly argue that commercial foreclosures follow residential foreclosures when economies experience extraordinary strain. Welcome to the coming commercial foreclosure explosion ladies and gentlemen. Commercial mortgage backed securities maintain the same inherent risk as residential mortgage backed securities. These securities are an amalgam of bundled commercial loans that investors purchase hoping on future returns based on an expected trail of interest payments.
With the American economy in turmoil it seems that problems in commercial mortgage backed securities are beginning to unfold. My hope is that a wholesale bailout of the commercial mortgage backed securities sector doesn’t follow, that is, using taxpayer money, our money, to bail out investors in these risky deals.
From the Wall Street Journal:
One lurking risk comes from refinancing. About $22 billion of underlying CMBS loans in the U.S. and U.K. will mature in each of 2009 and 2010, rising to $36.5 billion in 2011 and $41.1 billion in 2012, according to Fitch Ratings. But a survey of 83 European banks by Cushman & Wakefield in March showed 59% weren’t lending against commercial real estate at all. Many of the rest would provide only small amounts. Meanwhile, loan-to-value ratios have fallen in the U.K. to 60% to 70% from 80% to 85%, the survey showed, making life tougher for potential buyers of buildings.
These strategies merely put off the problem, in the hope lenders will be in better shape to provide financing down the road. Ratings agencies have started to downgrade deals because of refinancing risk, and this is likely to continue.
Moe’s Commentary:
I am hoping that the commercial mortgage backed securities problems don’t escalate. However, with businesses failing all around us and with commercial properties experiencing declines in occupancy I see little hope that the commercial mortgage backed securities market won’t experience anything other than what the residential mortgage backed securities market has.