According to the survey by the National Association of Realtors or NAR, the most of the small commercial property deals have been able to fall through, is because of the tighter lending standards. From 2011 itself, the commercial loan market started to show signs of steady growth. However, still the growth has not been able to be steep enough because of tighter credit situations for most of the small businesses. The number of purchases which were made scuttled, because of low cash flow. These businesses have not even been able to use the commercial loans for?consolidation, which may have proved to be of some help with regards to their debt situation.
The situation of the commercial loans
As per the survey by NAR, most of the commercial buildings were built using cash like those of the apartments, the offices, the restaurants, the shopping centers, and the warehouses and so on. The chief economist of NAR has put the situation in words as ?This is very much a tale of two markets,? just like the Tale of Two Cities by Charles Dickens. He also added that ?There have been notable improvements in capital for large commercial transactions valued at $2.5 million or higher, but there remain significant challenges for small businesses.?
Moreover, in addition to the above situation, the concerns are also growing over the maturing commercial real estate loans. It was seen that both the lenders and the borrowers have started to battle with the huge amount of dollars that were made on the commercial?property loans, with the swelling commercial real estate market of 2007. These cash amounts are supposed to come due in 2012 itself.
However, the market experts have warned that under the current economic situation, this may lead to a spurt in the recapitalizations and also refinancing against the commercial loans. If the amount with regards to the New York city is considered, almost $70 billion of the commercial mortgages are supposed to reach the maturity within this year. These were mainly issued as the collateral for the bonds. Amongst these, and as per the data by Trepp LLC, almost $26 billion which is 37.4 percent of the total commercial loan amounts (considered with regards to New York) are the 5 year loans. These were originated when the real estate market was at its heights, and when the underwriting standards were at its slackest best.
These loans had been taken out against some known properties like those of the Manhattan Mall; on which $232 million is suppose to be maturing. Then, there is also the Jumeirah Essex House, which has $180 million on the loan.
In addition to the large number of loans which are going to mature this year, last year the number was $40.7 billion with regards to the securitized commercial mortgage loans. This number is expected to be $49.5 billion with regards to the maturity in the year of 2013.
City Capital Finance arranges commercial and multifamiily loans.? For more information please visit out website at http://www.citycapitalfinance.com or call us at 877-900-1211
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