Commerical Real Estate Wants A Bailout

Posted by: Chris Palmeri on January 15, 2009

Lot’s of folks have been saying commercial real estate is the next shoe to drop, after residential property. Even it seems the trade association for commercial real estate developers, owners and related professionals. “We’re looking at $400 billion in loans maturing and unless we find a way to finance them it will take commercial down hard,” says Tom Bisacquino, president of the National Association of Industrial and Office Properties, now known simply as NAIOP.

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Homeowners, car makers and banks have been asking for some of the Treasury Dept.’s $700 billion in bailout funds. Add commercial real estate investors to the list. Bisacquino says the association has been lobbying to secure $20 billion in loan guarantees from the Treasury. Perhaps another $200 billion more could come from the FDIC.

He points out though that this market is different from earlier busts such as the late 1980s when there was too much overbuilding of commercial property. Today its not a question of oversupply, just a lack of liquidity.

Biscaquino says the model is not all different from the terrorist risk insurance the government helped finance after 9/11. “The government could create this secondary market,” he says. “They’re not really writing a check.”

Bisacquino says the slump has impacted his association’s 18,000 members, who range from large publicly traded real estate trusts to small architectural firms. He says the number of companies that are members hasn’t changes but they are paying dues for fewer of their employees.

Reader Comments

Snoz

January 15, 2009 7:56 PM

Once government starts handing out free bailout money, that's when all the corporate Crooks, Scamers and Liars (CSL) make their appeal in the media telling their “tragic” business stories to justify receiving free cash. These CSL, dressed in fancy suits with self-anointed elaborate corporate title, have been looting and fleecing the American taxpayers throughout this bailout schrade. CSL makes Madoff’s rip-off scheme look like child’s play. As trustees of America, our politicians, government official and institutions have failed to protect America and the American taxpayers. After our gullible and naïve government officials generously gave hundreds of billions of dollars as free money to BearStearn, Merrillynch, BoA, CitiBank, AIG, Chase, MorganStanley, Wachovia, WaMu, IndyMac, Countrywide, GM, Chrysler, GMAC, and GoldmanSach, the CSL got the message: if you want free money, you go before the Congress and claim yourself as a victim of locked-up credit; broadcast the consequences of immense jobs lost and the harm to the US economy if your business is allowed to fail. America, the land of opportunity, has now turn into the new Somalia of North America. Like the pirates of Somalia, these CSL have high-jacked various corporations, holding workers, shareholders, and the American economy as hostage until the ransom is paid in the form of bailout money. Once the bailout money is parachuted down to the CSL, our government does not have any direct supervision of where the bailout money is spent. Without a doubt the real beneficiaries are the CSL. And where does the bailout money go? To their multi-million dollars salary, corporate perks, and golden parachutes. With billions of dollars available as gifts from taxpayers, America’s favorite pirates are coming out of the wood-work making their case before Congress. American taxpayer can anticipate its future CSL pirates from the steel industry, building industry, commercial real state, and repeat offenders such as the auto industry and financial institutions. Just as Somalia’s failed government lead to proliferation of pirates, so too the failed American government lead to creation of a new growth industry: the CSL.

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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