Credit Crunch Hitting CRE
From the WSJ: Credit Downturn Hits the Malls (hat tip Houston)
The credit crunch … is creating problems in commercial real estate, driving down prices of office buildings, shopping malls and apartment complexes …
For the past few months, the sector has been in a state of near-paralysis … The number of major properties sold is down by half, and many worry that the market will continue to deteriorate as property sales remain slow, prices continue to drop and deals keep falling apart.…The CMBS market was the engine that drove the commercial real-estate boom. Over the past few years, the issuance of CMBS allowed banks to get rid of the risk on their books, lend with cheaper rates and looser terms and that made it easy for private-equity firms to do huge real-estate deals.…Real-estate investors aren’t the only ones feeling the pain. Many big banks issued short-term loans to buyers and […]
