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Line for Bailouts Grows: Commercial Developers Want Govt. Aid, Too

Posted Dec 22, 2008 10:40am EST by Aaron Task in Investing, Recession

It's almost like there's a carnival barker standing outside Congress shouting: Bailouts, bailouts, step right up and get yer bailouts."

First it was the banks and brokers, then came the automakers and homebuilders. And now commercial real estate developers are lining up for some government largess, according to The Wall Street Journal.

There's good reason commercial real estate developers are looking for a bailout: About $530 billion of commercial mortgages are coming up for refinancing in the next three years, the WSJ reports.

The refinancing isn't a surprise as these loans were structured to refinance after 5 to 10 years with a big balloon payment at the end. What has caught developers off guard is the stress in the credit markets and the likelihood they won't be able to get nearly enough financing when the loans are set to expire.

Certainly, the developers are suffering because of the credit crunch but, just like the automakers and homebuilders, they apparently never considered such an environment and vastly overbuilt during the past cycle. Developers just assumed they'd always be able to access the debt markets to roll over the financing.

The industry is asking commercial real estate loans be included in the $200 billion Fed program recently established to buy consumer loans. With that plus the second $350 billion TARP fund yet to be allocated, there probably will be a handout for commercial developers.

Will the bailout madness never end?

172 Comments

__A_YAHOO_USER__
__A_YAHOO_USER__ - Monday December 22, 2008 10:46AM EST

Are you kidding me?? Who is next to ask for money? What I want to know is, WHERE"S MY BAILOUT !!!!

JeanR
JeanR - Monday December 22, 2008 10:49AM EST

Yeah, well when simon properties debt, the big honcho in mall world, is yielding 13.9% Spread to Worst, how do you make money after buying and developing some of these places at the astronomical valuations. They are all now like a bond, and these properties like homes and other places are trading at a huge discount and its only going to get worse. Time to but a real estate short ETF and wave bye-bye to this sector. Office towers, hotels, malls, we have way, way too much supply and not anywhere near the demand now.

JeanR
JeanR - Monday December 22, 2008 10:50AM EST

Yeah, well when simon properties debt, the big honcho in mall world, is yielding 13.9% Spread to Worst, how do you make money after buying and developing some of these places at the astronomical valuations. They are all now like a bond, and these properties like homes and other places are trading at a huge discount and its only going to get worse. Time to but a real estate short ETF and wave bye-bye to this sector. Office towers, hotels, malls, we have way, way too much supply and not anywhere near the demand now.

david
david - Monday December 22, 2008 10:51AM EST

What about the American tax payers? You know, the men and women who paid into this system and kept it going due to their blood and sweat, why must they live out their lives as indentured servents due to the stupidity, and greed, of those who can grab some politician's ear with bribe money?

dano
dano - Monday December 22, 2008 10:54AM EST

Our country is being destroyed from the inside! That is the way to guarantee long term pain and suffering. Bailout funds should only be allowed for individual taxpayers and no companies or corporate entities. Rely on the consumer to get the economy out of this rut, not for companies to get the economy out. The consumer will allocate their resources efficiently and force uncompetitive companies out of the market.

__A_YAHOO_USER__
__A_YAHOO_USER__ - Monday December 22, 2008 10:55AM EST

I will study the book about it..........But history show commercial properties always recover after enduring bad economic cyles.........It is a bargain that is woth more than what you pay for, in 3 to five years time.....

Nick
Nick - Monday December 22, 2008 10:58AM EST

SOUNDS LIKE AH GOOD REASON TO INVENT ?? PRINT ??? OR START AH NEW CURRENCY , ???? WE DON,T HAVE THA SLIGHEST INKLING WHAT TO EXPECT , EXCEPTS GONNA BE AH REAL , REAL TOUGH ROAD AHEAD ,,, I WONDER WHATS NEXT ?????

tommy
tommy - Monday December 22, 2008 11:04AM EST

These people do not care about the middle class or what political side your on. This is just the beginning. Start hording your money and pay off all your outstanding debts. This is only round One of Three Round fight. IF you thought the SUBPRIME mess was bad the Commercial Real Estate Bubble was twice as bad and not just here but the modernized world. Get Prepared NOW

tommy
tommy - Monday December 22, 2008 11:05AM EST

These people do not care about the middle class or what political side your on. This is just the beginning. Start hording your money and pay off all your outstanding debts. This is only round One of Three Round fight. IF you thought the SUBPRIME mess was bad the Commercial Real Estate Bubble was twice as bad and not just here but the modernized world. Get Prepared NOW

tommy
tommy - Monday December 22, 2008 11:05AM EST

These people do not care about the middle class or what political side your on. This is just the beginning. Start hording your money and pay off all your outstanding debts. This is only round One of Three Round fight. IF you thought the SUBPRIME mess was bad the Commercial Real Estate Bubble was twice as bad and not just here but the modernized world. Get Prepared NOW

__A_YAHOO_USER__
__A_YAHOO_USER__ - Monday December 22, 2008 11:11AM EST

The true professional Investor never give up.......Why they know laready the outcome because they will end up winners.....Yes the value of their holdings dropped but they will never ever lost their heart an faith on hot.....They have experience it in theitr life time the similar situation like our today....

maicaray
maicaray - Monday December 22, 2008 11:17AM EST

This is madness! I hope the Obama administration is not the same as that idiot "mission accomplished" Bush! I am against bailing out these whining losers. Put any monies in the hands of the taxpayers...that's the right thing to do. Taxpayers are 2/3 of the economic engine. Why would we bail out Landlords and brokers?

Berseken
Berseken - Monday December 22, 2008 11:18AM EST

They can line up. I don't think they'll get the funds. No major impact on the economy if they go down in flames. Who really cares if the mall I go to is empty of stores and its owner is bankrupt or just empty of stores...

madmilker
madmilker - Monday December 22, 2008 11:36AM EST

Great.....the only secure job in America is the printer tat prints up all them dollars.....sad tat Congress has no balls cause for the past 95 years they have let tat FED (private bank) suck the American taxpayer dry with the sayin' "what we gonna to for you" crap.

Whit Chambers
Whit Chambers - Monday December 22, 2008 11:36AM EST

Is this what is meant by wealth re-distribution?

Mike
Mike - Monday December 22, 2008 12:02PM EST

TREMENDOUS over development and over building. The wealth-transfer will happen natually due to bankruptcy and fire sale pricing of assets. Those who have saved and lived within their means are about to have their time... it's a good time to have been meek... time to inheret some earth!

NicholasM
NicholasM - Monday December 22, 2008 12:06PM EST

maicaray - what makes you think the next administration has your best interest at heart? Putting monies in the hands of the taxpayers caused the subprime fiasco. Would you want that mess to continue? Here is something you need to do before you start getting your hopes up... do some research on what 3 million jobs does for the economy; especially the 3 million jobs promised by the President for Change. You also want to check out some of the other promises... check out means research. After finishing your research, you will see the true depth of what baseless promises await America. Yet, many Americans will be sucked in by this false hope. American workers have been betrayed for many years and electing the same people over and over just puts this country into a bigger mess. That is what uninformed voters have done. Are you one of them?

Mike
Mike - Monday December 22, 2008 12:07PM EST

It's THE GREAT RECESSION! Deleverage all you can... and invest what you have left over, if you want to be the wealthy of the next generatin you MUST invest today.

Baldev
Baldev - Monday December 22, 2008 12:13PM EST

Until now I thought that beggars in street ask people for money give me a buck or what ever,but now I am surprised to see these mutibillion dollar tycoons begging for relatively less weathy people's money.But they have this fancy name for it Call Bailout.What a same.Greed has no limits.

Yahoo! Finance User
Yahoo! Finance User - Monday December 22, 2008 12:14PM EST

I want a bailout. I promise not to give myself a bonus or use a corporate jet.

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