by Rebecca Walker — December 29, 2009—A dozen trade groups headed by the Real Estate Roundtable are lobbying the Federal Reserve to include the commercial real estate industry in a $200 billion credit facility to help stave off a coming wave of foreclosures by unfreezing credit and helping investors purchase or guarantee commercial mortgage-backed securities (CMBS).
Industry leaders are asking that the Fed use funds from the Term Asset-Backed Securities Loan Facility (TALF) to guarantee, finance or purchase the asset-backed securities collateralized by newly or recently originated commercial real estate mortgages. The Treasury announced TALF late last month with the aim of freeing consumer credit such as auto loans, student loans and credit cards.
Estimates of commercial mortgages maturing by the end of 2009 range from about $160 billion to $400 billion, with even more coming up for refinancing in 2010 and 2011. Up to three-quarters of that debt is supplied by CMBS and commercial bank financing. But CMBS has all but evaporated this year and banks have turned off their spigots, potentially affecting the refinancing of more than $3 trillion in commercial real estate debt.
“Right now, we believe there is insufficient systemic capacity to refinance expiring, performing commercial real estate loans,” the trade groups said in a Nov. 26 letter to Treasury Secretary Henry Paulson. “In fact, the bonds of publicly traded real estate companies now trade at a level suggesting investors do not believe that sufficient credit will be available through the system to refinance over the next several years.
“Without leadership by the government through significant policy action, we believe jobs will be further threatened, the banking system will face additional pressures, and the savings of countless citizens will be unnecessarily lost or severely eroded.”
In addition to the Roundtable, signing the letter was the American Land Title Association, American Resort Development Association, Appraisal Institute, Building Owners and Managers Association (BOMA), the International Council of Shopping Centers (ICSC), Mortgage Bankers Association, National Apartment Association, National Association of Industrial and Office Properties (NAIOP), National Association of Real Estate Investment Managers, National Association of Real Estate Investment Trusts (NAREIT) and the National Multi Housing Council.
For more information, see the Web site of the Real Estate Roundtable.
