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As Era of "Extend & Pretend" Ends, More CRE Shopping Begins
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| Guest post by: Carl Moore |
Article Overview: Bank "extend and pretend" strategies through 2008-2010 moved a glut of loan maturities to this year. As of year-end 2010, its forecasted more than $850 billion in commercial real estate loan maturities this year. And 2011 has produced a strong stream of newly delinquent loans on top of already significant increases in loan modification and liquidation activity.
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Free Download - Big Consolidation in Solar-equipment By Carl Moore |
As Era of "Extend & Pretend" Ends, More CRE Shopping Begins
As
the "extend and pretend" period of the Great Recession wanes into a
period of true loan modifications, lenders and note holders appear to be
forcing more distressed loans into the marketplace. And in turn, institutional
investors, who were disappointed in the relatively slim pickings available in
the distressed markets after raising enormous sums targeted for acquisition in
2009 and 2010, seem to be back on the hunt for more opportunities in
investment-grade commercial real estate.
According to the latest Commercial Repeat-Sale Indices, transaction activity
increased 24% from 2,176 sale pairs in the first quarter of 2011 to 2,690 sale
pairs in the second quarter of 2011. Investment grade transaction activity
drove most of the increase. Noteworthy in the investment grade index is that
the percent of distressed sales increased to 34% of the activity in June 2011
from 32.2% in May 2011.
Under such "extend and pretend" policies, lenders and servicers
simply extended maturity dates as a way to wait out the Great Recession. Then
in the second half of last year, the number of "true" modifications
of principal and interest rate reductions began to make up an increased share
of activity. This also opened the doors for banks to start releasing loans they
did not want to modify back into the marketplace.
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About the Author: Carl Moore RSS for Carl's articles - Visit Carl's website CFO Capital Partners is a group of seasoned business professionals that have come together to offer a variety of services suited to fit the needs of those seeking Corporate and Real Estate Capital. We act as Independent Business Transaction Intermediary serving both Buyers and Sellers, also specializing in the Mergers & Acquisitions of businesses in the mid-market arena, nationally and internationally. Business Transfers, Selling of Businesses, acting as Finders - all fall within our province. We also work with Cooperating Intermediary and Investment Bankers nationwide as well as in Latin America, Europe and Asia. Carl Moore/ Managing Director "We Bring Experience to the Meeting" CFO Capital Partners 437 FoxTract Rd., 1st Floor Bridgeport, NY 13030 O: 315.633.9081 * Efax: 775.248.6603 Carl@CFOCapitalPartners.com * www.CFOCapitalPartners.com Loan Programs for downloads Go To: http://www.cfocapitalpartners.com/ProjectFinancingPrograms.html Click here to visit Carl's website Distressed Real Estate Continues to Grow Joint Venture Equity Big Consolidation in Solarequipment Economic growth has slowed considerably since earlier in the year We had TARP for residential now comes commercial |
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