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Prudential U.S. Quarterly Report

January 28, 2010

rudential has put out it’s latest report outlining it’s take on the commercial real estate market. Some bullet points from the report:

  • The recent appearance of positive indicators – economic and otherwise – has turned market sentiment in the commercial real estate sector decidedly more favorable.
  • Widespread distress has yet to materialize, although it should be more apparent in 2010 due to increasing defaults within CMBS pools. However, many banks lack incentive to foreclose on overleveraged properties, having learned from the early 90’s that acting too hastily may exacerbate financial losses. Both borrowers and lenders are trying to buy time and salvage as much value as possible by extending and modifying loans, particularly those that cover debt service.
  • The bottom line is that things are improving since investors can see or think they see the light at the end of the tunnel. But at the same time, they remain quite guarded:

    The market can’t be fully healthy until the distress cycle is completed, and we remain early in the game. And while a large amount of capital has been raised relative to the current level of opportunities available, it remains small relative to what will be needed to recapitalize distressed properties over the course of the cycle.

    Full report embedded below…

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    Categories: Commercial Finance and Lending | Commercial Real Estate Investing | Market Data
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    Tony Orlando January 28, 2010

    I just stopped by your blog and thought I would say hello. I like your site design. Looking forward to reading more down the road.

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