NEW YORK
EDITORIAL ADVISORY BOARD
RICHARD T.
ANDERSON
New York
Building Congress
DAVID ARENA
Grubb & Ellis
STEVE B.
BLEIWEISS
Mancini Duffy
WILLIAM G.
COHEN
Newmark Knight
Frank
JEFFREY R.
DUNNE
CBRE New York
Tri-State
DAN FASULO
Real Capital
Analytics
ROBERT
FREEDMAN
Williams Real
Estate
ROBERT K. ALLEN GOLDMAN
FUTTERMAN SJP Residential
Robert K. Futterman
& Associates
JOSEPH R.
HARBERT
Cushman
& Wakefield
SUZANNE ANDREW L. HERZ
HEIDELBERGER Patterson,
Skadden, Arps, Slate, Belknap, Webb,
Meagher & Flom LLP & Tyler LLP
LENORE JANIS
Professional
Women in
Construction
EDWARD JORDAN
Marcus & Millichap
Real Estate
Investment Services
ROBERT KNAKAL
Massey Knakal
Realty Services
JEFFREY
NEWMAN
W & M Properties
CRAIG PANZIRER
Monday
Properties
CARL F.
SCHWARTZ
Herrick,
Feinstein LLP
Properties LLC
www.GlobeSt.com/NewYork
FRANKLIN S.
ZUCKERBROT
Sholom &
Zuckerbrot Realty
Commercial real estate is lobbying
Washington for TARP money—do you
think it will come through?
A
Robert Knakal, Chairman, Massey Knakal Realty Services
I think the commercial real estate industry could be an
indirect beneficiary of TARP funds. While no property owner will
receive funds from the government, TARP funds could be used to
enhance credit available to the industry; however, the form of this
enhancement is not clear.
The most significant issue facing the industry today is the lack of
sufficient financing to satisfy the significant amount of commercial
mortgages that are maturing during 2009. I have seen estimates KNAKAL
ranging from $150 billion to as high as $400 billion of commercial
loan maturities this year.
The overwhelming majority of debt placements in the present market have come from
portfolio lenders who are making smaller loans, generally not in excess of $30 million.
This pipeline is keeping the small- to mid-sized market afloat but the capacity of this
sector cannot meet the demands of the broader market. There are some great properties
out there with performing loans that are at conservative loan-to-value ratios, and upon
maturity, the owners will not be able to find refinancing sources.
Given that the loans are safe and are performing, you would think the lender would
just extend the loan. However, the capital requirements of the banking industry today are
such that almost all banks need as much cash as possible and they will be reluctant to
implement extensions.
While I don’t think TARP money can directly solve this problem, I believe subsequent
bank infusions will have mandates attached to stimulate commercial lending. TARP funds
could also serve as a backstop for commercial real estate loans which could provide some
protections for lenders and would have a multiplier effect of the dollars deployed to ad-
dress this financing quagmire.
With regard to the economy, I believe that we will see more policy measures from the
government which will focus on three areas:
1) cushioning the decline in private sector consumption and investment through a large
fiscal stimulus package of somewhere between $600 billion and $900 billion;
2) a refocusing on efforts to clear bank balance sheets of illiquid troubled assets and
recapitalize those same institutions; and
3) measures to work against an undershooting of home prices through principal writ-
edowns and lower mortgage rates. We have seen some positive policy news already which
has been delivered during the past few weeks. Measures of financial distress have been
improving gradually, albeit unsteadily. This has occurred despite an economic outlook
