Savvy investors looking for relatively stable places for their capital to appreciate are increasingly looking at commercial real estate. With interest rates close to zero and Treasury bills yielding next to nothing, investors are betting that the country's commercial real estate markets will eventually rebound. Many are investing in distressed commercial properties and projects and taking a 'buy and hold' strategy until the market improves. Prices in commercial real estate have shown modest gains recently according to the CCIM Institute and the Real Estate Research Corporation. Analysts have been urging investors to sell in recent months and take advantage of modest gains in their investments. However, it appears that few are heeding this advice and are slowly adding more commercial property to their portfolios. Frank Simpson, 2011 President of the CCIM Institute, is one expert urging investors to continue holding onto their investments. In a recent statement, he validated the prevailing wisdom of making careful investments and holding onto them until the market rebounds. He said, 'Though much uncertainty remains in the overall economy, transaction trends for commercial real estate continue to improve. The challenge for investors remains finding the right properties at the right price with the best return potential.' As Louisville commercial real estate experts with years of experience helping investors find properties for their businesses and long-term investment goals, we agree with Mr. Simpson. That old saying about buying at the bottom of the market and waiting until it rebounds is definitely true in the current Louisville commercial real estate market. We have been helping savvy investors find business and investment opportunities for years and have seen many commercial real estate market cycles wax and wane. Let our experience and knowledge of Louisville commercial real...
A report recently published by Moody's Investors Service and Real Estate Analytics LLC states that prices for commercial real estate
in the U.S. jumped a record 4.3 percent in September from the previous month. This represented the first gain in commercial real estate values since May and was a much-needed bright spot in an industry plagued by empty floors in office buildings and empty storefronts in malls and downtown shopping districts. While down a staggering 43 percent since their peak in 2007, commercial real estate prices showed a 0.3 percent year-over-year increase from the previous September. However, analysts were quick to downplay the significance of September's numbers.
Nick Levidy, Managing Director for Moody's, warned that the jump in prices is not an indication of better times ahead for the commercial real estate industry. He said the recent volatility in prices "are due in part to the uncertain macroeconomic environment and the effects of a thin market with low transaction volumes."
In our area, Louisville commercial real estate
prices are down, but not as sharply as many areas of the country since we are somewhat insulated from the wild swings that have roiled many markets. This provides stability and makes commercial real estate in Louisville an attractive investment for business owners looking to expand operations. It is also a viable option for real estate investors looking for income property and a safe place for their money to appreciate. If either of these scenarios describes your situation and you're looking for the area's best selection of Louisville commercial real estate, please browse the pages of our site and call Louisville Properties at 502.744.9504 for more information. Let our expertise and knowledge of the Louisville real estate markets
be the catalyst for your success!...
The Louisville commercial real estate
market could see its biggest sale since 2004 when the $115 million, all-cash sale of the National City Tower downtown is complete sometime in December. One of several "trophy towers" across the country that are defying downward trends in the commercial real estate markets, the National City Tower most recently sold in 2005 for $95 million. According to insiders, a real estate investment trust based in Newport Beach, CA, KBS Realty Advisors Cos., has a contract to buy the tower from Meridian Investment, Inc.
The tower is located in Louisville's central business district and is considered a very attractive investment as it is currently 94 percent leased. This is a notable exception to many office towers that are struggling with vacancies. Towers such as our National City Tower are more than graceful additions to our skyline; they are important magnets for business development, and they enhance the value of nearby properties.
While we don't help clients buy and sell huge downtown office buildings, we do make our own contributions to the Louisville real estate
market. We have been helping people buy and sell homes, duplexes, apartment buildings and a wide range of commercial properties for years, and we are proud of the services we provide to our clients. We offer many different flexible services to help you find a qualified buyer for your home, and we use our experience and resources to help buyers find the perfect Louisville real estate for their needs. If you're thinking of buying or selling real estate in the Louisville area, call Louisville Properties first at 502.744.9504....
During a down real estate market in which wary buyers prefer to rent instead of making the large financial commitment of buying a home, property management has become a hot topic in real estate circles. A wide range of different property management courses, from one-day seminars to weekend classes to weekday lectures and full 11-week courses, are popping up in many areas of the country. Many real estate professionals struggling with plunging home sales and lower incomes are taking to courses to expand their services offered to clients and improve their revenue streams. Even newcomers to the real estate business are enrolling in these classes as a way to build and grow an investment portfolio while they pursue a new career path. Prospective property managers are learning a variety of skills including the following:
- Tenant screening
- Advertising and marketing
- Rent collection and disbursement
- Property maintenance
- Preparation and management of legal documents
- Income and expense report production
- Other essential facets of this growing industry
Here at Louisville Properties, we think it's great that more people are getting into the property management business. Competition makes us better at what we do, and we welcome newcomers to the Louisville property management community. We don't perceive it as a threat because, as the old saying goes, there's no substitute for experience, and we have been providing flexible, customizable property management services in Louisville for a very long time. We offer property owners a full suite of different property management services to meet their unique needs. If you're a property owner looking for professional, experienced Louisville property management services that solve problems for you instead of making them, please...
Each month thus far in 2010 hasn't been much fun for real estate professionals across the country, and September was no exception. Sales are down, home prices are down in most markets, foreclosures continue to mount and economic uncertainty is dissuading buyers from making purchasing decisions. For buyers, uncertainty about the nation's economy is trumping record low mortgage rates that make now the best time to borrow money to buy a home in decades.
On September 30, giant mortgage lender Freddie Mac released a survey that indicated mortgage rates for 15- and 30-year mortgages in the last week of September met or exceeded record lows. Rates for borrowers with the best credit averaged 4.32 percent for 30-year fixed rate mortgages, a figure that would have been unthinkable just a few years ago.
A survey released by the Census Bureau recently shed some light on why low mortgages rates have failed to spur home sales. For many Americans, buying a home is not economically feasible. The Bureau's American Community Survey released September 28 indicated that more than one in five Americans can barely afford to pay rent and 40 percent of respondents reported spending more than 35 percent of their income on housing. The nation's commercial real estate sector is also flagging. Moody's/REAL All Property Type Aggregate Index for September showed that sale prices for commercial real estate are only 0.9 percent higher year-over-year from October 2009.
Current conditions in both residential and commercial real estate have created the best buyer's market in recent memory. If you've been thinking about investing in Louisville commercial real estate to start a business, expand an existing one or as income property, contact the experts at Louisville Properties today at 502.744.9504. We offer the full spectrum of real estate services from property management to brokerage services and much more!...
According to a Canadian real estate company, there will be an auction on October 15th for the former workplace of thousands of Louisville area residents. The Colgate-Palmolive Plant in Clarksville, which once employed 1,500 people at its peak of production in the 1960s making toothpaste, shaving cream and other household products, will be on the auction block. Active International, which bought the property from Colgate-Palmolive in 2009, is hoping that developers will bid on the sprawling complex of buildings to make the property into homes, shops, offices, a hotel and other uses.
Colgate-Palmolive closed the plant in December 2007, laying off the last 200 workers at the once bustling industrial complex. Since then, Clarksville city officials have rezoned the site for mixed-use development in the hope that developers will turn a liability into an anchor for revitalizing the city's struggling south end. City officials also hope that builders will preserve the complex's historic clock, visible from downtown Louisville for decades, one of the largest in the world and a local landmark, and make it the centerpiece of the site's redevelopment.
Clarksville officials are hoping that a developer or consortium of developers with deep pockets and a plan in place to repurpose the industrial complex will come forward at the auction and transform a blighted part of the city into an asset.
Are you a local business owner or budding entrepreneur looking for commercial real estate in the Louisville area to start a business or expand an existing company? For the area's best selection of Louisville commercial real estate and superb customer service, contact the real estate pros at Louisville Properties at 502.744.9504. There is a wide range of Louisville commercial real estate from which to choose throughout the Louisville metropolitan area. Call us today!
A new report issued by a real estate analysis firm reports that foreclosure rates in Louisville and Jefferson County were up by more than two percent in May. The news was in the "Real Estate News and Trends" publication issued by Corelogic, which is an information, analytics and business services company. The two-and-one-quarter percent rise in foreclosures represented a jump of one-quarter of one percent from foreclosure rates in May 2009.
The mortgage delinquency rate in and around the Louisville area is nearly six percent, and industry analysts disagree whether or not foreclosure rates in the area will continue to rise. Click here for a map of foreclosure rates by zip code in the Louisville area.
Plunging home values, upside-down mortgages and other factors plaguing many housing markets have not hit the Louisville real estate market as hard as many others. However, we're not immune to job loss, and while the Corelogic report didn't cite any causes for the rise in Louisville foreclosures, job loss is certainly a leading factor. Many of our area's larger employers have cut staff and closed facilities, which surely contributed to the spike in foreclosures.
If you're looking at foreclosures in the area for your primary residence or as an investment, feel free to browse our listings or give us a call for the area' most complete selection of residential and commercial Louisville real estate. We offer a wide range of services for buyers and sellers that are customizable to fit the unique needs of your situation. To speak with an experienced Louisville real estate professional at our locally owned and operated firm, call us today at 502.744.9504.
Resource link: http://www.fox41.com/Global/story.asp?S=12773286
Real estate investment giant Prudential Real Estate Investors is predicting that the struggling commercial real estate market in the country will recover much more quickly than during a similar downturn in the 1990s. Prudential said they are "relatively optimistic" about a faster turnaround for hotels, apartment buildings, retail space and office buildings.
"Last time it took five years for real estate values to go down to where they bottomed... We've done that now in about two years," a manager of the Prudential Global Real Estate Fund told reporters in New York. "So we are going to see a faster recovery, a faster write-up in the market."
He also said that a lack of new construction largely due to tougher lending standards for developers would contribute to a faster turnaround by keeping new commercial real estate from affecting the market for up to five years. He cited current rock-bottom commercial real estate rents as another contributing factor that would help the turnaround by enticing tenants who will open new businesses and expand existing ones.
Prudential did cite one threat to a commercial real estate recovery, which is jobs. They said that unless companies began hiring again, they would have little reason to seek out larger spaces to accommodate their needs and open new branches.
While it has taken some hits like most other markets across the country, the Louisville commercial real estate market is in better shape than most are. If you've been looking for a new space to open a new business or a larger space to grow your business, you have come to the right place. No one has a better selection of Louisville commercial real estate than Louisville Properties, and we offer a wide range of customizable services to meet your needs. Call us today at 502.744.9504 to speak with the leader in Louisville commercial real estate!
Resource link: http://www.reuters.com/article/idUSN2027331720100720...
After decades of serving breakfast, lunch and dinner to hungry Louisville residents, Masterson's Food & Drink in Old Louisville closed recently, and the building will be razed to make room for a large Louisville commercial real estate project. Located for more than 50 years at Third Street and Cardinal Boulevard, Masterson's is the future site for a four-story retail and apartment complex, which will serve local residents and students at the University of Louisville. Heine Bros. Coffee, Jimmy John's Gourmet Sandwich Shop, Qdoba Mexican Grill and other retailers have already signed on as tenants of the new development. The project's first phase will be completed by fall 2011, and it will include retail space and apartments for up to 373 students.
The venerable 42,000-square-foot full-service restaurant, catering and banquet hall served its last hungry guest on July 31, and many of the regulars mourned its closing while praising the food and service. Four siblings owned and operated the restaurant, and they currently have no plans to reopen. They have relocated the catering business to a new building on Lexington Road in Irish Hill.
The new Louisville commercial real estate is good news for students and residents in the area. If you're a commercial property owner in the Louisville area who is seeking professional property management services, call the Louisville property management professionals at Louisville Properties at 502.744.9504. They offer a wide range of customizable property management services including tenant screening, Internet marketing, income and expense reports and many others. For more information about our professional Louisville property management services, call us today!
Resource link: http://www.courier-journal.com/article/20100721/ZONE07/7210312/Old+Louisville+landmark+Masterson+s+to+be+missed...
The Louisville Metro Planning Commission recently reviewed and approved plans for a $45 million South Pointe Commons shopping center project, and the plans now require the approval of the Louisville Metro Council. The project expects to break ground on Bardstown Road just south of the Snyder Freeway in Fern Creek shortly after it receives approval from the Metro Council. It could be a bright spot in an otherwise tough Louisville commercial real estate market.
Mike Brown, director of business development for Louisville-based Barrister Commercial Group LLC, was hopeful about the project's chances for approval, saying, "I'm pretty confident it will be successful." If approved, there will be 366,000 square feet of new commercial space built on the 43.5-acre site, which will include movie theaters, restaurants, at least one big-box retailer and other retailers. In addition to the estimated 1,000 construction jobs created by the project, the new shopping center will create an expected 560 permanent jobs and have a projected economic impact of $6.5 million annually.
If approved by Louisville zoning boards and other agencies, ground would be broken on the project by early 2011, and barring any unforeseen obstacles, the first retailer would be able to open for business in late 2012 or early 2013. Initially, the project was slated to include 12 buildings and a total of 220,000 square feet. However, enthusiastic support from local and national retailers inspired the contractor to increase the size of the project.
Unlike the Louisville residential real estate market, commercial real estate in Louisville has struggled over the last couple of years as the recession tightened lending standards and throttled consumer spending. However, Louisville's tough commercial real estate climate has also created unique opportunities for businesses and investors. For the area's best selection of Louisville commercial real estate and outstanding customer service, call Louisville properties today at 502.744.9504....
Despite growing losses on their commercial real estate investments and against conventional investing wisdom, stock shares of banks heavily invested in commercial real estate have been rallying recently. While many investors remain justifiably wary of investing in such banks, others are betting that the predictable hits from commercial real estate losses will not be as severe as expected.
Goldman Sachs is estimating that around 7 percent of commercial real estate mortgages will go into default at some point. However, as of April 2010, banks that have issued large commercial real estate loans are reporting that only 2.5 percent have gone in to default. The unexpectedly low rate of bad commercial real estate loans leads some investors to believe that although more losses are expected in the near future, the losses will be spread out over time as will their impact on balance sheets.
Other investors remain wary, citing low commercial real estate default rates in a reeling commercial market as evidence that these losses are being artificially lowered. There is precedent for this as it is not uncommon for the lender to restructure commercial mortgages in the hope that restructuring will help keep the debtor from defaulting on the loan. Despite the current volatility in most commercial real estate markets across the country, bank stocks have recovered to the point that some appear to be fully valued. Nevertheless, many industry analysts predict that commercial real estate mortgage defaults will worsen in the coming year, and if that occurs, banks heavily invested in commercial real estate could quickly lose favor with investors.
If you're thinking about buying Louisville commercial real estate as an investment or to expand your business, no one in the Louisville area has a better selection or offers better service than Louisville Properties. If you're selling Louisville commercial real estate, Louisville Properties can help you as well. The realty agency offers a wide range of options for sellers....
It's tax time again! Preparing your federal and state income taxes is stressful enough. If you now own a home, there can be a whole new level of questions to which you might not have the answers. Making mistakes on your taxes can mean many things. You can end up owing more than you need to if you don't maximize your deductions. You deserve the refund you're entitled to get, and avoiding these Louisville homeowner tax errors will help you get your check and reduce your chance of an audit.
The keyword we want to remember here is "points," a simple term used to describe charges from a borrower to obtain the mortgage. It also describes mortgage fees, lender fees and other costs incurred. It's only when they're interest paid in advance
that you can claim them as tax deductable and only when your loan applies towards improvements of your home.
You must have paid the same amount of cash (if not more) into your home mortgage as the amount of points that are paid. The amount paid out cannot surpass the price normally charged in your area. You must also use the cash method when it comes to accounting for your expenses. State your income the year you obtain it and deduct the expenses in the tax year in which you paid the points.
As far as property tax is concerned, if you paid the taxes owed by the seller at closing, you can't deduct that amount. You have to consider it as part of your costs in the property. Hopefully you'll have a pleasant tax season in 2010, and remember if you're interested in commercial property or home ownership in Louisville, contact Louisville Properties
February 12, 2010, marked the date for information provided by the International Revenue Service that will affect homebuyers in the Louisville real estate
market. There are new guidelines for the two tax credit programs that have been created to assist in the country's failing home owning circumstance. The credit is $6,500 for previous homeowners buying new (or resale) homes, and first-time buyers are receiving an $8,000 credit. Of course, there are qualifications that the buyer(s) must meet before they are deemed eligible for the tax credit.
The new guidelines are clearing up discrepancies in the paperwork. Specifically, the documentation that buyers need to provide to receive their credits was altered to help prevent fraudulent credit claims. The abuse of the program was discovered in early 2009, and federal monitoring is now in place to stop fraudulent transactions before they are processed.
All information about the tax credit, as well as the proper documentation process to receive your tax credit refund, can be located on the IRS website at www.IRS.gov
. It should be noted that because of the tightened program, the process of receiving the credit would be considerably longer due to the monitoring. The IRS is estimating that checks will be sent to buyers between four and eight weeks after the paperwork has been given the "all clear."
Despite the added paperwork and time required to receive this credit, the program is still a great opportunity for first time and repeat homebuyers. If you're looking for a home, the Louisville real estate market has something to offer everyone. Call Louisville Properties
today at 502.744.9505 and get more details on property listings in the area....
The Wall Street Journal reports that analysts at investment bank Morgan Stanley believe that the country's commercial real estate problems are manageable. A team of six of their commercial real estate analysts said recently that the current problems that plague that sector of the nation's real estate market are "only a moderate headwind for the economy," and that commercial real estate values reached their lowest point last summer. The team forecasted that the country is heading towards a "multi-staged" and "gradual" recovery and expected real estate values to remain stable throughout 2010.
They based their predictions on some movements in the investment property sector recently, among them CIM Group's move to pay off debts for their Drake Hotel property in Manhattan, Blackstone Group's move to buy Wachovia Corp.'s debt as part of a real estate investment trust, and other developments. However, others did not share Morgan Stanley's optimism. Jamie Dimon, Chief Executive of J.P. Morgan Chase & Co., announced that his company's losses on commercial real estate loans were expected to get worse in the coming year.
While optimistic, Morgan Stanley tempered their enthusiasm for the commercial real estate market by saying that they expected commercial real estate losses for banks to worsen in 2010. They also told reporters that the challenges of refinancing commercial mortgage-backed securities were "substantial" and issued a warning that distressed commercial assets could continue to decline in value this year.
An article in The Richmond Times-Dispatch predicts that the nation's commercial real estate outlook won't look much better in 2010 than 2009. After a boom period over the previous years where developers, bankers and investors did very well, the economic downturn has hit commercial real estate in Louisville and other markets across the country especially hard. Long-term relationships between developers, bankers and investors have been hit hard as investors and bankers run for cover, and developers are forced to declare bankruptcy.
Commercial real estate values across the country peaked in late 2007 and have dropped a precipitous 43.7 percent through October of last year according to a report issued by Moody's/REAL Commercial Property Price Indices. The biggest losses in commercial real estate values were from October 2008 to the same month in 2009 that showed year-over-year declines of 36.4 percent.
One of the more accurate snapshots of the commercial real estate market is the number of delinquent loans for commercial real estate projects. From November 2008 to November 2009, the balance of delinquent commercial real estate loans soared from $7.03 billion to $37.93 billion, an astonishing 440 percent increase. While some industry watchers predict modest gains in commercial real estate values and sales in some markets, other markets are expected to continue struggling with few gains until late 2010 at the earliest.
If you're thinking of taking advantage of the current drop in Louisville commercial real...
Real estate industry analysts are forecasting that 2010 will be another tough year for commercial real estate with prices expected to hit bottom, creating market difficulties not seen for generations. However, they also said that like any other depressed market, there would be unique opportunities for savvy investors with deep pockets. They say that the 2010 commercial real estate market will be an exercise in the survival of the fittest, with only the strongest developers and investors still around by the end of the year. In other words, commercial real estate analysts expect market conditions to get much worse before they recover with 2010 being the year that many creatively financed real estate deals made at the height of the commercial real estate boom coming due.
Regarding all the loans coming due in 2010, one analyst said, "So that's a whole lot of mortgages that have to be refinanced. And how they get refinanced is the problem that's out there. No one knows where the money is coming from. Most of these deals are underwater or have little or no equity in them and the lender's not going to give you an 80 percent loan anymore. They're going to give you a 60 percent loan."
He called mortgage-backed securities the commercial real estate sector's Frankenstein monster, saying that some lenders will be willing to extend mortgage terms while others will have no choice but to repossess some properties.
If you're thinking about buying Louisville commercial real estate to start a business, expand an existing one or as income property, there's never been a better buyer's market than right now. For the area's best selection and most complete listings...
This article reports something that Louisville real estate agents already know—many home sellers are willing to lower their asking price to facilitate the sale of their home. More than a quarter of homeowners across the country wishing to sell their home reduced their selling price at least once in the last twelve months, according to real estate search firm Trulia. The company says the average sale price reduction was 10 percent, but almost half (40 percent) of the top 50 major metropolitan real estate markets across the country saw selling price reductions above 30 percent.
Homes sold in the Northeast saw the highest rate of price reductions with 29 percent of home sellers settling for less than their asking price. Coming in second for reduced home selling prices was the Midwest with 28 percent, followed by the West with 25 percent, and the South with 24 percent.
"With mortgage rates still low and the expansion of the tax credit to trade-up buyers, we could see significant inventory, both new and shadow inventory, hit the market during the next four to six months," said Pete Flint, Trulia co-founder and CEO. "Inventory levels this quarter are poised to be atypical of a normal real estate market, which could create tremendous pressure on sellers to price their homes competitively and move their property before the tax credit expires on April 30th."
Some metro areas experienced notable drops in home asking prices with Kansas City leading the way at 59 percent, Colorado Springs at 43 percent, Omaha at 39 percent,...
reports that billionaire investor, Wilbur Ross, says that the U.S. is at the very beginning of a "huge crash in commercial real estate
" and that he would exercise "extreme caution" before investing in this sector of real estate.
"All of the components of real estate value are going in the wrong direction simultaneously," Ross said in a Bloomberg interview. "Occupancy rates are going down. Rent rates are going down and the capitalization rates—the return that investors are demanding to buy a property—are going up."
The Moody's/REAL Commercial Property Price Indices have fallen almost 41 percent since October 2007, according to Bloomberg. Ross expects that it will get much worse before it gets any better. Ross, CEO of WL Ross & Co., says that office space in commercial buildings has and will continue to be hit very hard as these buildings are losing tenants at an alarming rate. He cited the fact that office vacancies in the U.S. hit a five-year high of nearly 17 percent in the third quarter of this year, and shopping center vacancies have reached their highest rates since 1992.
"I think it's going to take quite a while to work itself out," Ross said. "Our methodology is to make a great big list," he said. "What's everything we can think of that's either wrong with the industry or that we just plain don't like about it? Then we start work on another list. If we had control of this industry, what would we do to fix each one of those problems? Once we feel that there is a reasonable likelihood that the second chart kind of equals the first chart, that's when we get ready to do something."
If you're thinking about taking advantage of current market conditions in Louisville commercial real estate
, call 502.744.9504 or visit the website of Louisville Properties today....
One Louisville commercial real estate
property owner said he hadn't been able to find a tenant for his small retail building he co-owns on Shelbyville Road in 15 months. This Louisville Courier-Journal article
reports that the owner's building had never been vacant for longer than a month in 25 years.
"That ought to tell you something," the developer said. "I believe it's a sign of the market."
He said that at least 10 percent of retail space in the Louisville commercial real estate market is empty, the highest rate of vacancy in five years, but still lower than the national average. More than one million square feet of Louisville retail space was vacated in 2008, according to CBRE-Louisville, a local commercial real estate analysis firm. The firm cited the bankruptcies of major retail chains Circuit City and Linens 'n Things as leading causes of the empty storefronts. One Louisville commercial real estate agent said that there hasn't been this much vacant retail space in the area in 20 years.
However, in what could be a sign of market stabilization, retailers filled more space than they vacated in the first half of 2009, according to CBRE's midyear report of shopping centers. National retailers are asking the company to watch for vacant commercial real estate in good locations for when the economy recovers from the current recession.
"They are saying, ‘Revisit all the vacant boxes and tell us where do you think we might be able to strike?'" one analyst said. "That is a positive sign."
The CBRE said that Louisville's commercial vacancy rate may seem grim, but it is still better than the current national average of 11.7 percent.
"Louisville is not tremendously overbuilt," like southern Florida or Arizona markets that are reeling much harder from the real estate bubble, he said.
If you need help buying or selling commercial real estate in Louisville, the ...!--more-->
Commercial real estate
owners and developers will get some much-needed flexibility to rework their mortgages or receive loan extensions under a new federal tax rule that could provide some relief to a deeply troubled sector of the real estate market. The new Internal Revenue Service rule will affect loans that are backed by office parks, office buildings, shopping malls and other types of commercial real estate that have been securitized and sold to investors.
The owners of commercial real estate that have been battered by tighter lending policies and plummeting property values have had a very difficult time negotiating with lenders on extending and refinancing loans. Many owners are perilously close to defaulting on or already have had to default on loans, particularly loans taken out a few years ago when the commercial real estate market was hot. Typically, commercial mortgages take long periods of time to rework or extend and without this new rule, many more owners would default on their loans, worsening an already reeling commercial real estate market in most areas of the country.
Many Real Estate Mortgage Investment Conduits—or Remics—and so-called grantor trusts, popular securitization vehicles for commercial mortgages, have been reluctant to rework or extend loans that aren't in default or at risk of defaulting within 6 or 12 months because they fear losing their tax-exempt status.
Due to the uncertainties inherent under the conditions, borrowers are very reluctant to invest in maintaining and renovating properties they may lose when these commercial mortgages come due. According to lender Deutsche Bank, $153 billion of securitized commercial real-estate loans are coming due by the end of 2012, and close to $100 billion of those will face difficulty refinancing.
The new rule would grant lenders some room to negotiate with borrowers who are still current on their mortgage payments and the change applies to all loan modifications made after January...!--more-->