SOS For Commercial Real Estate Industry

December 24, 2008
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The impending maturity of the $6 trillion worth of debts incurred for real estate investments including office buildings, hotels and shopping malls has forced the commercial real estate industry to seek help from the United States government. The industry’s big players have already met with the Treasury Department and Federal Reserve officials, congressional leaders and the transition team of President-elect Barack Obama to plea their case.

Industry leaders said $160 billion worth of commercial debts will fall due next year while $530 billion more will fall due in three years. The properties financed by these debts are in danger of foreclosure or even bankruptcy considering that the owners will have a difficult time getting loans with the virtual collapse of the credit markets. The increasing number of foreclosure is also expected to become a problem for banks whose main task is to lend and not to own real estate.

Green Street real estate researcher and managing director Jim Sullivan said the government can help because it is the only source right now of cheap money to serve as real estate capital.

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