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Commercial Properties Being Written Down by 50%

Guest post by: Carl Moore

Article Overview: The CCIM Institute and the Real Estate Research Corporation recently reported that the commercial real estate recovery has become dependent on, and stands precariously linked to, the re-pricing and deleveraging of property positions, and less contingent on access to capital, given that liquidity has returned to the commercial real estate markets, and in some cases, is scarily reminiscent of the pre-credit crisis capital market environment.

Commercial Properties Being Written Down by 50%

Properties Being Written Down 50%, Says CCIM, RERC

The CCIM Institute and the Real Estate Research Corporation recently reported that the commercial real estate recovery has become dependent on, and stands precariously linked to, the re-pricing and deleveraging of property positions, and less contingent on access to capital, given that liquidity has returned to the commercial real estate markets, and in some cases, is scarily reminiscent of the pre-credit crisis capital market environment. Capital is being invested in commercial real estate assets that have been re-priced to a level that makes sense and with sufficient deleveraging, meaning there's not too much of a loan above the value of the asset. The large institutions and other investors have been able to re-price their assets down by 40 to 50% while still maintaining a positive equity position.

The CCIM Institute's chief real estate economist, Ken Riggs, CCIM, believes that given the amount of liquidity in the market and the ability of lenders to re-price assets at a level that will clear the market, the process of refinancing debt will be at a more measured pace than most predict and serves as a guiding hand out of this severe and Draconian commercial real estate recession.

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Article Tags: ccim institute, commercial real estate, liquidity, market environment, real estate research



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