The multi-family divisions of Freddie Mac and Fannie Mae – “the other side of the house” – rarely receive the credit due to them. It is estimated that 22-28% of American households live in rented homes. The large majority of these households fall squarely into the lower to middle income brackets. Their ability to find safe, well maintained rental communities often depends on the health of the apartment market. Critical to that marketplace is the availability of debt that helps finance the construction and acquisition of rental communities. Clearly, apartment operators/owners are willing to invest in rental properties if…

  Over the next several years, hundreds of billions of debt capital will be needed to refinance maturing loans, and when market fundamentals rebound, additional debt will be needed for new acquisition and development projects. The future role of the agencies, which provided a lion’s share of debt capital for the multifamily market, is somewhat uncertain as the present conservatorship expires at the end of 2009. Smaller regional and community banks have begun to provide some debt but larger banks remain paralyzed. The number of insurance companies providing debt has diminished and the ones quoting are very conservative. But even…

  Let’s stop talking about how bad everything is for awhile. Let’s think about getting onto the next phase: Recovery. I’m not suggesting the “when”, because we have all heard pundits taking shots at that. The range I have heard is somewhere between 6 months… and never. That’s probably correct. I would like to solicit opinions on how the recovery will start, not when. Will it be a regional thing? Will the Southwest (Phoenix, Vegas, etc.) lead us out the way they led us in? Or will the Rust Belt get a huge boost from the governmental incentives to the…

  Do you ever feel alone when you read or watch the news? The only one paying income taxes at the prescribed rates? The only one that resisted the urge to buy a bigger house? The only consumer that lives within your financial means? The only business or investment manager with morals and ethics? The only one that is not looking for a government bailout? The only one not getting anything from the bailout? You are not alone. In fact 80-90% of Americans are with you. 80-90% pay taxes and their home mortgage and hope the government covers the core…

  Don’t expect government infrastructure jobs to bail out the commercial real estate industry. A recent story on the Inland Empire area of California shows the limitation of a government-created job market. The 9.5% unemployment rate in the area matches Detroit as the worst in the nation. At the same time, Riverside (one of the Inland Empire communities), has almost $1 billion worth of public-works projects underway or planned, from widening roads to building a new jail. The area illustrates both the promise and the limitations of President Obama’s spending proposal to pull the U.S. economy out of a recession…

Perhaps the biggest challenge the Commercial Real Estate industry faces right now is the lack of capital.  All those billions of dollars pumped into the system over the last 10 years by CMBS have evaporated.  In many ways, there was too much money.  That led to heated competition among lenders to “win” deals by increasing loan-to-value ratios and reducing underwriting requirements.  It also was a huge factor in the rapidly increasing prices paid for real estate as low interest rates allowed cap rate compression.  I don’t have a crystal ball.  I have more questions than answers.  But perhaps some of…

We are looking at $18 billion in CMBS maturities for the calendar year of 2009.  A year or two ago, that didn’t sound like a big deal.  Today, the picture has changed. But hold on.That CMBS number for 2009 is chump change… for 2010 it swells to $65 billion, in 2011 it’s $55 billion, and in 2012, it’s back closer to $70 billion. Don’t forget to add the life company, agency, and bank maturities to those numbers and now you’re talking some real money. So how are they going to be refinanced?  With the CMBS market effectively moribund, the life…

President Obama and the American real estate industry have a mutual interest in turning off the twin economic engines that are driving the nation’s financial downturn—the fall in housing prices and the credit crunch/impending collapse of major banks.   Most experts agree that the way to halt the slide in housing prices is to minimize foreclosures by keeping people in their homes with delinquent mortgages that have been restructured.  A huge obstacle to the restructuring of home mortgages is the inability of bankruptcy judges to alter home mortgage terms.  Ironically, when most debtors appear before bankruptcy judges, their largest economic liability…

  The capital markets are still in varying states of paralysis. This paralysis originally set in mainly due to losses ignited by the residential sub-prime meltdown and disruption in other financial markets such as credit default swaps. These losses created a very large erosion of capital causing many financial institutions to fear for their existence and made capital preservation the main priority – not lending. The TARP funds already committed and the expected continued government stimulus has helped to settle the capital markets but uncertainty now results from what lies ahead for economic fundamentals, especially for the commercial real estate…