Comments on: Prudential CRE US Quarterly Update http://www.squarefeetblog.com/commercial-real-estate-blog/2009/11/02/prudential-cre-us-quarterly-update/ Commercial Real Estate Blog Sat, 06 Mar 2010 00:06:52 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Tampa Commercial Real Estate http://www.squarefeetblog.com/commercial-real-estate-blog/2009/11/02/prudential-cre-us-quarterly-update/comment-page-1/#comment-3101 Tampa Commercial Real Estate Tue, 03 Nov 2009 13:44:59 +0000 http://www.squarefeetblog.com/?p=3371#comment-3101 As dire as it seems, the end result for the CMBS market renewals is not as simple as insurance cos and banks picking up the slack on the renewals or Armageddon will occur. CMBS note holders will realize that they will probably have 2 choices at renewal: 1. force the properties in to default and take a loss, or 2. Rework, renegotiate and extend terms If the property is a performing/non-performing asset, my feeling is the CMBS note holders will negotiate a work out situation and roll the loans over rather than force default and a foreclosure. Remember, a rolling loan gathers no loss. The IRS has already cleared the path for this type of negotiated settlement and officials are putting together the infrastructure to allow note holders to more freely communicate. The situation looks dire, but I think the end result will fall far short of the Armageddon predictions that are being made. Eric Odum Net Lease Commercial Advisory As dire as it seems, the end result for the CMBS market renewals is not as simple as insurance cos and banks picking up the slack on the renewals or Armageddon will occur. CMBS note holders will realize that they will probably have 2 choices at renewal:

1. force the properties in to default and take a loss, or
2. Rework, renegotiate and extend terms

If the property is a performing/non-performing asset, my feeling is the CMBS note holders will negotiate a work out situation and roll the loans over rather than force default and a foreclosure. Remember, a rolling loan gathers no loss. The IRS has already cleared the path for this type of negotiated settlement and officials are putting together the infrastructure to allow note holders to more freely communicate.

The situation looks dire, but I think the end result will fall far short of the Armageddon predictions that are being made.

Eric Odum
Net Lease Commercial Advisory

]]>