With a record amount of commercial real-estate debt coming due, some of the country’s biggest property developers have become the latest to go hat-in-hand to the government for assistance.
They’re warning policymakers that thousands of office complexes, hotels, shopping centers and other commercial buildings are headed into defaults, foreclosures and bankruptcies. The reason: according to research firm Foresight Analytics LCC, $530 billion of commercial mortgages will be coming due for refinancing in the next three years — with about $160 billion maturing in the next year. Credit, meanwhile, is practically nonexistent and cash flows from commercial property are siphoning off.
Unlike home loans, which borrowers repay after a set period of time, commercial mortgages usually are underwritten for five, seven or 10 years with big payments due at the end. At that point, they typically need to be refinanced. A borrower’s inability to refinance could force it to give up the property to the lender.
Every private hospital I know went on a building spree in the last 5 years in order to more effectively “compete” with its local neighbors for the better insured patients. Most of that debt was variable.
After the commercial builders, the next domino will be the hospitals.
Where does it end?
Where does it end? At dole out #539,802. I drew that number ticket! After I get my handout, no one else does.
[i]Where does it end?[/i]
It doesn’t. The ratchet only moves one way.
[i] The ratchet only moves one way [/i]
Not the political ratchet. But you got my point.
Government has only one trend: expansion. The only check on its growth is when the people cannot (the Soviet Union) or will not (the American Revolution) fund it.
Boy, it seems like everyone in town is standing in line for a government handout. Attention!!! it didn’t work in the 1930’s; it will not work in the 2000’s. Let’s pray that we don’t get led into WWIII like we were led into WWII. And yes, I am old enough to remember the 30’s and so is my wife! Nuff said!!!