The lack of credit is putting the screws to the commercial real estate market. If you think we are having big issues qualifying home owners for mortgages, the residential market is down right easy compared to the commercial market.
The tightening of lending standards has crippled many of the markets. Of course, there are those that will capitalize on the tougher market conditions and new vulture funds are being formed. These funds will offer cash to beleaguered sellers to try to steal properties over the next year.
“In 2008, I expect to see [lenders] reprising properties on a grand scale, saying you can have this at 30 or 40 cents on the dollar” for certain buildings in some markets, said Christopher Carroll, managing director of Cohen Financial LP, a Chicago-based financial-services firm. “Now, investors are putting together funds they’ll use when they think values have hit bottom.”
With the credit market crippled and underwriting criteria tightened, commercial property prices and sales volume have fallen steeply in the past few months, according to a mid-December report from Real Capital Analytics, a New York-based real estate research firm. Exactly when the floor for commercial property prices will be reached is anybody’s guess. via chicagotribune.com.
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Counterparty default is the next leg down in the distressed debt markets. We will acquire such debt and have assembled an expert team to assist.
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