Though inspiring, you have to be careful reading the Deutsche bank report. It focused on high value CMBS loans only. They did this because they could specifically identify each loan and had extremely detailed and complete data about every one of them, including exact cash flow models. There were 54079 loans totaling $601.9 Billion. Thus, the average loan was institutional grade CMBS and exceeded $11 million - significantly beyond the capability of most individual investors.
In subsequent testimony before congress, Richard Parkus, author of the Deutsch Bank report, clarified several items. He specifically noted that, "Commercial real estate financing markets are effectively closed, at least for loans in excess of $25-$35MM. Smaller loans on properties that are performing well have continued to have some degree of success refinancing, mainly with regional banks. However, we believe that this source will continue to deteriorate as problem loans mount in bank portfolios."
How much the smaller loans sources will deteriorate is unclear and neither explained in the Deutsche Bank report nor in the WSJ article. If Mr. Parkus is right, institutional grade vulture funds are in for a field day within a few years. We little guys might not have the same opportunities, since funding constraints for the lower dollar deals might not be as dire or drive as many properties back to the lenders as predicted for the institutional grade properties. Our advantage of course, is that we generally only need a handful of properties.
My sense is that a good deal now is still a good deal and I would not let the Deutsche Bank report or WSJ article sway me from an otherwise excellent investment. If you can find something that conservatively meets your criteria, and which can be financed with a sensible loan, then go for it now. If not, sitting on cash now is an excellent way to pass the time. You almost can't lose.
