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Geithner's Plan May Not Save Commercial Real Estate

Treasury Secretary Timothy Geithner's financial stability plan may come too late to rescue the commercial property market, which is following housing into a slump.

Lending has dried up as $171 billion of commercial mortgages held by non-bank investors come due in 2009, according to the Mortgage Bankers Association. Issuance of commercial mortgage- backed securities, which supply cash for lenders to make more loans, fell 95 percent in 2008, according to JPMorgan Chase & Co. Geithner wants to expand an existing federal lending program to buy the securities and spark loan-making.

“CMBS is a four-letter word,” said William Acheson, who tracks apartment real estate investment trusts for the Benchmark Co. LLC in New York. “The Treasury plan gets questionable paper off questionable financial institutions' books, but it will take an awful lot more confidence for people to come back to securitized mortgage pools.”

The highest number of bankruptcy filings by office, retail and apartment owners were in most of the states hardest hit by residential foreclosures in the fourth quarter, according to a Bloomberg map based on data from commercial broker Marcus & Millichap Co.'s Special Assets Group and RealtyTrac Inc., a seller of default data.

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