Commercial Real Estate Crisis Ahead

There is a 3.5 Trillion Commercial Real Estate debt in the United States. A major crisis could potentially bring down more than 500 Regional, Sub-regional, and Community banks in the next 12 months alone. Listen to a discussion with Harrison LeFrak of LeFrak Organization…as he puts it “Commercial Real Estate is in a Slow-Motion Car Crash”.

As reported on Bloomberg.com:  “A crisis of unprecedented proportions is approaching” in the U.S. commercial real-estate market, according to Randall Zisler, chief executive officer of Zisler Capital Partners LLC.

The returns on commercial property — apartment buildings, hotels, industrial sites, offices and stores — as compiled by the National Council of Real Estate Investment Fiduciaries were negative for the past five quarters, the longest streak since 1992.

Property prices have fallen by 30 percent to 50 percent from their peaks, Zisler estimated. The plunge has wiped out the equity in most real-estate deals that relied on debt financing since 2005, he wrote.

Zisler, whose firm focuses on real-estate investment, estimated that building owners will default on $500 billion to $750 billion of mortgage debt. This equals as much as 54 percent of the $1.4 trillion in loans that will come due in four years, by his count.

“Much of the debt is likely worth about 50 percent of par, or less,” the report said. Many banks will end up insolvent as they reduce the value of their holdings, he wrote, adding that regional and community lenders are especially vulnerable.

If you are experiencing financial hardship in regards to your commercial property, contact us for a FREE consultation.  Get the help you need and deserve.  Call Larry Wilkes at 888-317-4374 οr email uÑ• directly аt: [email protected]