Bailout nation gets another group asking for money, this time in the property developer segment. Large commercial property developers are now standing on the steps of capitol hill asking lawmakers for a piece of the bailout pie as they are concerned that many commercial mortgages that are coming due will not be able to be refinanced during the next three years due to strained liquidity, tighter credit standards and most concerning, lenders reluctance to lend. The Wall Street Journal article, Developers Ask U.S. for Bailout as Massive Debt Looms, mentions that commercial developers have met with the current administration, members of Congress and representatives of the incoming administration but state that those groups seem to be more focused on using funds for a consumer debt bailout rather than a commercial mortgage debt. The article quotes Foresight Analytics and estimates that $160 billion of commercial mortgages will mature next year. Assuming that refinancing are off more than 50% according to a Deutsche Bank report referenced in the article, that’s at least $100 billion for commercial developers in any stimulus or relief package. Publicly traded senior housing developers will have a difficult time but even more concerning is for the small and medium sized developers as they try to refinance their traditional bank debt on their facilities. For the full WSJ article, click here (subscription maybe required).
