A recent letter sent to Treasury Secretary Henry Paulson, and signed by a dozen real-estate trade groups, painted a bleak scenario: "Right now, we believe there is insufficient systemic capacity to refinance expiring, performing commercial real-estate loans," said the letter. "For many borrowers, [credit] simply is not available," the letter noted.
To head off some of the impending pain, the industry is asking to be included in a new $200 billion loan program initially created by the government to salvage the market for car loans, student loans and credit-card debt. This money is intended to go directly to help investors finance purchases of securities backed by these assets. If commercial real estate is included, banks might have an incentive to make more loans to developers since they'd be able to repackage and sell them more easily to investors with the assurance of government backing.
As part of their lobbying efforts, some industry representatives have asked lawmakers to explore the idea of setting up a separate program aimed at boosting lending to commercial real estate only.
"We've been urging Washington to put this as one of the top priorities in dealing with the economy," says Steven Spinola, president of the Real Estate Board of New York, underscoring the need for the government to help spur commercial property lending either directly or indirectly.
Link. You can download the full letter, which is signed by the Real Estate Roundtable, the American Land Title Association, the American Resort Development Association, the Appraisal Institute, the Building Owners and Managers Association, International, the International Council of Shopping Centers, the Mortgage Bankers Association, the National Apartment Association, the National Association of Industrial and Office Properties, the National Association of Real Estate Investment Managers, the National Association of Real Estate Investment Trusts and the National Multi Housing Council here.