* 93 pct say real estate values are lower than last year
* 82 percent say values will continue to deteriorate
By Ilaina Jonas
NEW YORK, Aug 5 An overwhelming majority of
U.S. commercial real estate executives believe their industry
is suffering and expect it get worse, according to a survey by
the Real Estate Roundtable released on Wednesday.
Some 93 percent of the 120 chief executives, chairmen,
presidents, board members and others polled said commercial
real estate prices are lower than they were a year ago,
according to the Roundtable, which represents commercial real
estate owners, developers, lenders and managers.
Eighty-two percent expect values to remain roughly the same
or erode further in the next 12 months, the survey said.
Hotels, office buildings, shopping centers, warehouses and
apartment building owners and lenders have been grappling with
declining rents and rising vacancies. Meanwhile, prices for
these assets have sunk has the credit crisis has dried up
sources to finance sales or refinance maturing loans.
Colin Dyer, chief executive officer of Jones Lange LaSalle,
one of the world's largest real estate services companies, on
Wednesday said that prices for U.S. assets have fallen by as
much as 50 percent.
"Over the last year or so the commercial real estate
industry has been stuck between a rock and a hard place,"
Jeffrey DeBoer, Roundtable chief executive said. "The rock that
we see is the fundamentals, which continue to create problems
for the industry. The hard place is continuing to not move and
that is the frozen credit markets, in terms of getting the
ability to finance or refinance debt."
So it's no surprise that the new overall sentiment index
reading of 49 is well below the ideal of 100. The index
questions about how responders feel about their business today
in terms of values, and access to credit and capital, and how
they believe their situation will be in a year.
"We're still in a very, very stressful situation," DeBoer
said. "We continue to have a lot of problems in commercial real
The Roundtable is pushing four proposals that could help
get the lending market rolling. The Roundtable wants the
federal government to establish a loan guarantee program to
insure loans to make securities sold against those loans in the
secondary market more attractive to investors. That would
encourage lenders to continue to make loans.
The Roundtable also wants the federal government to set up
public/private funds to buy new as opposed to legacy loans.
Additionally, the group is asking the government to modify
the Real Estate Mortgage Investment Conduit (REMIC) rules that
allow loans that have been securitized into commercial
mortgage-backed securities (CMBS) to be extended and modified
without risking the tax exempt status of the securitized
Finally, the industry anticipates that hundreds of billions
of dollars will be needed to fill the gap between mortgages
that are maturing and new lower mortgages that would be
provided if the lending market does return. The Roundtable is
urging Congress to revamp the Foreign Investment in Real
Property Tax Act of 1980 to attract more foreign equity to U.S.
commercial real estate.
(Reporting by Ilaina Jonas, editing by Leslie Gevirtz)