A new coalition of commercial real estate interests is urging the government and Congress to act quickly to revive CRE lending and help speed up the economic recovery.
In a "Roadmap to Recovery," the Commercial Real Estate Coalition outlines 51 recommendations to revive the CRE sector and refinance $1.3 trillion in CRE mortgages that mature by the end of 2013.
Right now, "the capital necessary to refinance those loans remains largely unavailable," said Steve Bartlett, president and chief executive of the Financial Services Roundtable. The coalition is calling for special tax breaks to boost investment in CRE mortgage and easing accounting, capital and appraisal standards to facilitate refinancings.
One of the major goals of the coalition is to restart the commercial mortgage-backed securities market. The roadmap points out that Financial Accounting Standards 166/167 combined with risk retention proposals and recent risk-based capital changes "can virtually halt the securitization credit markets and restrict overall credit availability."
The coalition also points out that banks hold $1.5 billion in CRE loans and property values have dropped by as much as 40% in some areas. Meanwhile, CRE lending and securitizations have plummeted to extremely low levels. "The liquidity crisis will be exacerbated by those small and community banks that will be hard hit by CRE losses," the roadmap says.