Debt Crisis May Be Easing For CRE Industry

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INDUSTRY NEWS FROM REMINGTON CAPITAL

Debt Crisis May Be Easing For CRE Industry

Pace of delinquent loans appears to be slowing

The smallest monthly increase in CRE delinquencies since October 2008 leads some analysts to conclude that the worst of the debt crisis may be over for the commercial real estate industry. The June delinquency increase of $6.3 billion was the smallest monthly up tick since November 2008 for properties valued at $5 million or more. The June report brings to $56.8 billion the amount of loans moved into special servicing during the first half of 2010. That's down 24% from the figure reported for the first half of 2009.

Banks Sitting On Assets As Long As They Can

Waiting for capital to get more robust before culling through underwater property

Barring another slowdown in the world economy, global commercial property markets are well on their way to recovery, according to industry analysts. The year-to-year figures are very bullish, they say, despite sales in the second quarter of 2010 slowing somewhat from the first quarter of the year due to continued price uncertainty. While still short of pre-recession sales levels, global sales of properties valued at $10 million or more soared to $231 billion during the first half of 2010, 75% higher than the first six months in 2009. Included in the research are apartment, retail, office, industrial, land and hotel sectors. Of the total, $33.2 billion in property sales took place in the U.S.

Fed In A Quandry About How To Energize Economy

Policymakers on the horns of a dilemma

Disappointing news about the latest U.S. employment figures being stuck at 9.5% is prompting members of the Federal Reserve Board to do something to stimulate the economy. But what? The Fed is in a bind. It feels compelled to act but fears that doing so may be send signals that the recovery is in worse shape than most think. Two options under consideration are: Announcing that short-term interest rates will be maintained at record low levels for as long as it takes to encourage the use of credit; and Using the proceeds of Fed investments to buy government debt to help drive down long-term interest rates. Even so, economists are skeptical about their potential impact since interest rates are already at historic lows and have yet to stimulate more buying activity.