‘Badly bent’ describes lenders and investors
Richmond Times-Dispatch reports: A bluegrass tune "I ain't broke, but I'm badly bent" recently recorded by The Dan Tyminski Band accurately describes both commercial real estate lenders and investors today.
On the lender side, more focus is placed on managing current portfolios and avoiding substantial write-offs than on new business.
New business for investors is limited to bargain-basement shopping. Most of their effort and time is spent on managing debt that is coming due and property level cash flows.
Commercial real estate values continue to drop from their highs reached in 2007, industry research reports show.
The most often-cited research is the Moody's/REAL Commercial Property Prices Indices, which shows that, in aggregate through April, commercial property values have fallen 29.5 percent from the peak in October 2007.
That is not terribly surprising given the state of the economy, but since the index is based on actual sales, perhaps the best conclusion is that it's just not a good time to sell real estate.
Most owners of commercial real estate agree.
Even in the multifamily market, where capital is still somewhat plentiful, few transactions are occurring. Multifamily sales in May fell 46 percent from April 2009 and dropped 80 percent from May 2008, according to Real Capital Analytics.
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Posted by: Matthew Stone