Courtesy of some CRE Analyst readers….

General themes

• Unlike most other recessions, we are in a “demand” recession – when the economy recovers, absorption should occur relatively quickly; however at 30% lower rents
• Full buildings will have debt in excess of value, but very little motivation for owners to sell – deleveraging is inevitable
• Result – fewer foreclosures; most owners will seek new infusion of capital with heavy dilution to existing equity (“Hope certificates”)
• Current owners are unlikely to realize much value
• Portfolio lenders such as pension funds/life companies are lending cautiously at low LTVs – 50-60%
• 2010-2012 – an estimated $1.3 to 1.8 trillion of mortgage debt is expected to mature; where will the debt come from?

Sam Zell – Keynote Speaker