2010 was a rocky year for the real estate and financial sectors. Although the economy is very slowly starting to improve, there are still many commercial properties on the market that are becoming distressed assets. At 1st Service Solutions, our team members have years of experience in volatile markets. We know what’s coming, and we know what to look for. Here are a few of our predictions for the upcoming year when it comes to distressed investing.
The market will continue to be saturated with distressed commercial real estate. This could potentially overwhelm CMBS loan servicers especially if they’re not prepared for what’s coming.
The correction of the tax code for CMBS loans by the IRS will help both borrowers and servicers reach mutually beneficial agreements. The tax implications for borrowers will be the driving force behind debt restructuring and distressed real estate resolutions.
Now that the economy is regaining its footing, CMBS loans and lending will become more commonplace in 2011. Commercial properties will once again begin to be seen as viable investments, and CMBS will once again be a popular, legitimate investment vehicle.
There will be many CMBS loans that will be maturing in 2011, creating multiple opportunities for investment and financing in the sector. CMBS Defeasance using U.S. Treasuries could also potentially become more commonplace.
The outlook isn’t completely rosy for 2011 and there are still many loans out there that will become distressed, despite the overall improvement of the CMBS fundamentals.
As trades of various distressed commercial properties pick up, the pricing on these trades will become less volatile. This will cause the bid/ask spread to shrink on these trades.
If the past decade is any indication, the only thing we can truly be sure of when dealing with distressed commercial real estate is that nothing is certain. To learn more about our predictions for 2011, or if you’re a commercial property owner who’s trying to work their way through the dense fog of CMBS lending and distressed investing, contact us today and we’ll put our expertise to work for you.