Jan. 11 (Bloomberg) -- U.S. commercial property deals are likely to climb 50 percent to $300 billion this year as loan maturities force asset sales and the economy grows, Real Capital Analytics Inc. said in its annual list of market predictions.
“Commercial real estate remains very attractive relative to other asset classes, and it is likely that equity capital will be both more plentiful and more motivated over the coming year,” the New York-based real estate research company said in today’s report. While a 50 percent increase is likely, there is a “good chance for a surprise to the upside,” the firm said.
Property owners and lenders have at least $160 billion of troubled commercial mortgages to resolve by reworking debt or selling the real estate backing them, according to Real Capital. With attractive financing difficult to come by, loan maturities will drive transactions, the firm said.
“While prices and loan terms have not improved enough to make refinancing feasible in most cases, properties can increasingly be sold at prices above their outstanding loan balance and are being listed for sale six to twelve months prior to maturity date,” Real Capital said.
As rents and occupancies start to rise consistently, investors will face increasing pressure to make acquisitions before expansion peaks and price gains accelerate, according to the firm.
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