Will TALF Save Commercial Real Estate …
By: Myles, April 8th, 2009
In todays WSJ there is a rather telling article entiled, Real-Estate Industry Pushes Fed to Lengthen TALF Terms, which may be of interest to our readers.
Acording to the piece, the real-estate industry is lobbying the Federal Reserve to modify a bailout program that many believe may avert a wave of commercial-property defaults.
Real-estate owners and investors who have talked to the Fed predict the central bank will begin offering some five-year loans under the government’s Term Asset-Backed Securities Loan Facility (TALF).
That is longer than the three-year loans being offered.While it may be a small change, the length of loans is a critical matter to the Fed, which prefers to make short-term loans. Longer-dated loans could make it more difficult for the Fed to fight inflation, as the bank can’t pull back the money injected into the economy.
Real-estate investors, however, said the longer-term debt is critical to saving the commercial real-estate business, which faces a record amount of debt coming due in the next three years. Industry observers are expecting the delinquency rate to double by the end of this year and go higher next year. Problems could be magnified if the credit drought continues and owners of even healthy properties are unable to refinance.
Acording to the piece, the real-estate industry is lobbying the Federal Reserve to modify a bailout program that many believe may avert a wave of commercial-property defaults.
Real-estate owners and investors who have talked to the Fed predict the central bank will begin offering some five-year loans under the government’s Term Asset-Backed Securities Loan Facility (TALF).
That is longer than the three-year loans being offered.While it may be a small change, the length of loans is a critical matter to the Fed, which prefers to make short-term loans. Longer-dated loans could make it more difficult for the Fed to fight inflation, as the bank can’t pull back the money injected into the economy.
Real-estate investors, however, said the longer-term debt is critical to saving the commercial real-estate business, which faces a record amount of debt coming due in the next three years. Industry observers are expecting the delinquency rate to double by the end of this year and go higher next year. Problems could be magnified if the credit drought continues and owners of even healthy properties are unable to refinance.
Tags: commercial real estate, TALF
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