or four months that you finally get a little more realistic. We’re
in the early stages of that with commercial real estate. The sellers really haven’t been willing to take the big discounts that may
be necessary to move their real estate.
GRAISER: The category killers that no longer have competition. Those tenants are safe bets because there are not a lot of
places to go outside of those categories. Whether it’s in electronics or linens, they’re safe bets.
GRAISER: Dave, do you think that with these balloon mortgages coming up, it’s going to start forcing these sellers to start getting more realistic with their pricing? The interest reserves on
those mortgages are coming due and they’ve got to refinance,
but have no place to go.
RITTER: Are there more regional or local tenants in shop-
ping centers than there were before? It seems like this
market is opening the door to opportunities for smaller,
GRAISER: What we’re seeing, because we’re out marketing a
HENRY: That’s the slow-motion train wreck we’re all wor- lot of these leases in non-bankruptcy and bankruptcy settings, is
ried about. There’s a huge wave of commercial real estate local retailers stepping up and taking over some of the vacated
loan maturities facing us. There has been some anecdotal space, though not, obviously, at the rate that any of us would
evidence that special servicers and others
are getting realistic, and if they have a
performing loan, they’ll consider extending it for 12 months or even 18 months—
with, of course, a higher interest rate and
fees. But why take a performing loan and
force it into foreclosure or a non-earning
status? We’re still very worried about all of
these maturities, but perhaps some sanity
will come into the securitization market Strategic insight.
and it won’t just be full of bankruptcies
SCHECHNER: With all the maturities, I
think the special servicers—because there
isn’t a robust investment sales market—do
not want to take back the assets and manage
the properties. That’s not what they’re set
up to do. If the borrower has been performing and not stealing the cash and is a decent
operator, why wouldn’t the special servicers
extend the loan for 12 months at a higher
rate and/or fees, and potentially a small pay
down if available? We anticipate you’re going to see a lot of these type of extensions
until the markets recover in some way.
GRAISER: One of the other things I’m
seeing is that some of the retailers, certainly the healthier ones, are getting
more realistic that this might be a really
good opportunity for them to buy back
some of their own real estate, especially
when you’ve got some of these free-stand-ers whose leases are coming due in the
next couple of years. Instead of trying to
renegotiate a rent reduction, they’re now
spending time with the landlord trying to
buy the real estate.
RITTER: Are there any retailers out
there that you can trust as a tenant?
HENRY: The safest place to be as a landlord is
in a ground lease position, where the retailer
has actually built his building on top of your
land and you’re receiving ground rent. If you
have a good credit tenant and a ground lease,
that’s a pretty good combination.
Reznick Group. Commercial Real Estate.
For the past three decades, Reznick Group has provided exceptional accounting,
tax and value-added business advisory services to our clients. Through our focus
on real estate, we provide the in-depth industry knowledge, vision and extensive
experience needed to steer our clients through the capital markets and the
constantly changing landscape of global real estate.
As one of the top 20 CPA firms in the United States, Reznick Group is committed
to providing proactive personal service and timely delivery of a superior work
product to consistently meet client deadlines. Our clients include institutional
private equity funds, pension funds investing in real estate, REITs, commercial
and residential property owners and operators, hotels and resorts, real estate
developers, homebuilders and land developers.
To learn how we can successfully partner with your company, please contact
Scott Farb 310.843.8200
David Kessler 301.652.9100
Timothy Kemper 404.847.9447
Joyce Price 410.895.7833
Atlanta | Austin | Baltimore | Bethesda | Birmingham | Charlotte | Chicago | Los Angeles | Sacramento | Tysons Corner