The Dirt Lawyer's Blog Archive

According to this Journal piece , the next potential mortgage crisis. We, of course, have been hearing about this for a long, long time now. Extending loans (sometimes called "extend and pretend") has been working well, especially, when the property is performing; i.e., cash flowing. But there is less flexibility in the CMBS market, where investors are expecting to clip coupons. I am going to go out on a limb and do a little crystal balling here, so please realize that these are just my own personal views. There will not be a collapse. Special servicers will be working long and hard and borrowers to find ways to stop a complete collapse. Lenders, as the story notes, have no incentive to realize losses. And there are supposedly buyers with dry powder waiting to pounce on properties at heavy discounts. The hedge to that is that I am not sure government programs will help that much on these deals. The other hedge is that the commercial market traditionally lags the re...

Here is the press release announcing GGP's forbearance request for the holders of Rouse unsecured notes. The company wants until the end of the year to reorganize and repay. The company is looking for similar extensions on other facilities. The thought has to be that lending will turn around because of all the monetary infusions and if it does not by year-end, there's going to be a whole lot of trouble going on. So what do you do if you are a lender? Agree to the forbearance in the hopes you will be paid off at year end, or let this go into BK thinking this is your best option? I'm not an expert on lending and banking, but if I were the lender I'd probably rather roll the dice with a forbearance than roll the dice in bankruptcy court. This means being an optimist about the economy eventually turning around, and while it eventually will you have a question of timing. It is when, not if. Others may (respectfully) disagree and I welcome those thoughts.

I'm under the weather and also under the gun on several projects (it never fails), so just a few quick thoughts for the day. On the gloomy side: In case you missed it, commercial and multifamily loan originations are in the tank . Mezz lenders are getting slaughtered , too. What is it with Chicago and luxury Asian hotels? First the Shangri-La has its problems, and now it looks like the Mandarin Oriental may not get off the ground, foreclosure and all that. The speculators say it is a matter of time, but my thought is that people will try to buy time until October for obvious reasons. And even the Fed is talking about CRE problems , although the hope is that the problems will not be as bad as the early 1990s. On the less gloomy side: Rob Bagguley of Transwestern has a great post at CPN about the encouraging signs of the market. I have to be reminded that there are good things going on and I thank Rob for doing so. Anecdotally I am seeing a slight uptick and thinking that perhaps...

While I have some projects I am working on, things are admittedly quieter than normal right now. Some of this is because it is January, which is usually a slow month. Some of it, however, is because of the economy. Many players still seem to be in a wait-and-see mode, and they are not bashful about. Another reason is capital, as some lenders are cutting back on deal flow , TARP money notwithstanding. (Kudos, however, to U.S. Bancorp , SunTrust Banks Inc. and BB&T Corp. for taking TARP money and upping lending activity.) But I know I am not alone. My colleagues in the CRE blogosphere are not posting as much either . One exception is in retail where David Bodamer is chronicling the job cuts, store closures and liquidations. The latest is at Home Depot, which among other whackings is shuttering its Expo concept . I'll admit this: I used to shop there a lot but never bought a thing because I ould find it cheaper elsewhere. Those big boxes should interesting to deal ...

From Globest.com : With the presidential inauguration less than 24-hours past, the real estate community is already seeking out signs on the direction President Barack Obama will take TARP. One likely development that will be welcome to CRE is a greater focus on accountability for banks that choose to tap the billion-dollar-plus program. Specifically, banks that participate will be required to account for the money at a more granular level. Let's hope so. Money flowing is what will work, in my humble opinion. If banks are "stabilized," as the story says (yesterday's plunge notwithstanding), then let's solve the real problem. No going back to cowboy lending, of course, but let's make the rational deals happen. If you want our money, do something other than hoard it.