Pall malls: Fear over defaults in commercial real estate
Thursday, Apr. 30 2009 @ 8:29AM
McClatchy's Kevin G. Hall just had to spoil this morning's fairly good market news ("Upbeat Earnings Boost Futures"). In "Next economic crisis looms: Commercial real estate defaults," Hall notes that thousands of commercial mortgages "valued at hundreds of billions of dollars" are nearing renewal dates and that two of every three "won't be able" to do their usual refinancing.
In sum, he says, "a vicious cycle may unfold much as it has in the nation's housing market." Hall paints this grim scenario:
A commercial mortgage meltdown is likely to prolong the nation's economic recovery. The falling prices in commercial real estate will lead to additional bank losses at a time when banks are sapped by home mortgage defaults and soaring credit card defaults. This could lead to future additional taxpayer assistance for the banks.
