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Government Moving Towards Bailout of Commercial Real Estate

March 9, 2009

But office vacancy rates are heading toward record levels, according to one estimate, and banks are exposed, with $1.72 trillion in commercial real estate loans outstanding as of Feb. 18.

The Christian Science Monitor has a pretty high-level article on the state of the commercial lending market. For almost a year now, many of us have been waiting for “the other shoe” to drop. The government is beginning to see the writing on the wall, and has recently expanded the TALF program to include CMBS debt. The article mentions the Hancock Tower in Boston which we discussed in several previous posts. According to the article, Victor Calanog from REIS estimates that the building might be worth as little as $575 to $735 million, or about half of what Beacon Capital was able to get out of it 2 years ago. Just a month ago, estimates for the properties value were in the $700-900M range!

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Categories: Commercial Finance and Lending | Trends
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