Kicking The Can Down The Road on Commercial Real Estate
Posted by dan wagener on Fri, Dec 31, 2010 @ 10:26 AM
Commercial real estate investors have been waiting patiently for banks to begin unloading the commercial properties they have foreclosed on. It appears that they will have to keep on waiting.
While there will be distress buying opportunities in the coming year, it’s becoming increasingly clear that the liquidation of toxic real estate assets by the banks will occur over a five year period rather than all at once. Unlike the savings and loan crisis of the late 1980’s, when the Resolution Trust Corp. swiftly liquidated poorly performing real estate assets for as little as 10 to 20 cents on the dollar, today’s banks haven’t been forced to sell their troubled assets.
Many borrowers have been granted loan extensions or modifications, a process that has become known as extend and pretend. In basic term, lenders are simply “kicking the can down the road” and hoping that the overall real estate market will improve in 2 or 3 years and save them from the unpleasant task of foreclosing on these properties.
Many large investors have set aside considerable capital in anticipation of a commercial real estate “Fire Sale” . These investors have been disappointed so far and it appears that they will have limited prospects over the next year or two. If I can be of assistance in your next real estate project please call me anytime.
Tom Wagener, CCIM
Wagener Equities, Inc.
Mobile: (847)445-9592
email: twagener@wagenerequities.com