In the Past Month
News from the industry and abroad
By Tony Stasiek, editor
With his group expecting nearly 50,000 attendees to its RECon
Global Retail Real Estate Convention this month (May 17-20, icsc.
org/2009SC), International Council of Shopping Centers President and CEO Michael Kercheval told Scotsman Guide writer
Jennifer E. Garrett of his retail sector’s biggest challenge.
“It’s all about capital markets,” Kercheval said as part of our Q&A, Page 14. “There’s a lot of
capital [out there], but it’s not flowing.”
Undoubtedly, folks from all ends of commercial real estate finance would second that motion.
The Mortgage Bankers Association announced that commercial originations for 2008’s fourth
quarter showed an 80-percent dive from the same period in ’07, down 53 percent from the previous quarter. Hotel-property loans alone dropped 99 percent year-to-year.
Treasury unveils details
of plan for toxic assets
WASHINGTON, D.C. — The U.S. Treasury Department
announced its plan to free banks from frozen assets on
March 23, using a partnership with the private sector
to give more clout to taxpayer dollars.
The program would develop funds to buy banks’ loans
and securities to jumpstart lending, according to the
To purchase loans stuck in a frozen securities market,
the Federal Deposit Insurance Corp. (FDIC) would
review assets banks want to sell and would see how
much funding the FDIC will guarantee, to as much as
a 6-to-1 debt-to-equity ratio. The highest bidder would
receive 50 percent of the equity required for the purchase. The private investor would then choose when
to sell the assets.
To call lenders and investors finicky funders would be a severe understatement. But for brokers
seeking to end the closing-table standoff, a little inside knowledge could go a long way.
This month’s Scotsman Guide features numerous articles devoted to risk management — and
how to understand just what makes lenders tick.
In our Lead Article (Page 19), IVI International Inc.’s George
Wilson offers seven tips for helping assess a property’s
condition. Especially when dealing with potentially troublesome property types — and really,
what doesn’t fall into that category? — this
due diligence is crucial to avoiding surprises
and pitching a deal to the right lender.
On Page 38, attorney Timothy E. Gilsbach of
Fox Rothschild LLP takes another angle on
property inspections — examining when
lenders blanch at the prospect of stating too
much in the inspection stage.
Illustration: Dennis Wunsch
Meanwhile, on Page 22, Hatch Jacobs LLC’s
Gary A. Horton looks at lenders’ growing
practice of having borrowers form single- or
special-purpose entities to mitigate banks’
risk in case of bankruptcy.
What We’re Blogging
GDP has worst quarter since
1982 as corporate profits slip
WASHINGTON, D.C. — The U.S. Department of Commerce confirmed its gross-domestic-product (GDP)
estimate for the fourth quarter of 2008, dropping the
figure one tick to - 6. 3 percent.
The report said corporate profits in the fourth quarter
fell sharply, dropping $250.3 billion after a decrease of
$18.5 billion in the third quarter.
The GDP had its weakest quarterly showing since 1982.
Economists now estimate the first-quarter GDP for this
year will fall between 4 percent and 5. 5 percent.
Congressional watchdog suggests
misuse of SBA low-income-program
WASHINGTON, D.C. — A sample of contracts in a U.S.
program targeting neglected business areas indicates
that “possibly thousands” of contracts were mishandled,
the Government Accountability Office (GAO) said.
The GAO said it found 19 contracts awarded via the
U. S. Small Business Administration’s Historically Un-derutilized Business Zone (HUBZone) program that
indicated “hundreds and possibly thousands” of improperly awarded contracts, USA Today reported.
The 19 contracts, totaling $30 million, were intended
for small businesses in low-income communities. In
2007, the government approved $8 billion in HUBZone contracts, which involved 9,300 businesses, the
On Mortgage Metrics: Commercial, scotsmanguide.com/COMmetrics
“The South shows the largest percentage of high-risk
LTVs with 12 percent of
its [scenarios on Scotsman
Guide Loan Post] having
LTVs of 81 percent or
greater. The national average was 10 percent.”
— DAN YEH, March 19
Percentage of High-LTV Loan Scenarios by Region
Percentage of Replied Posts
81% to 90% LTV
91% to 95% LTV
Source: Scotsman Guide Loan Post
Scotsman Guide’s Mortgage Metrics: Commercial blog presents data from our award-winning lender-search engines and Scotsman Guide
Loan Post. It’s updated each Thursday at
scotsmanguide.com/COMmetrics. Follow Dan Yeh on Twitter:
IMF downgrades economic outlook
for 2009, citing ‘true global crisis’
WASHINGTON, D.C. — The International Monetary
Fund (IMF) announced it would downgrade its assessment of the global economy, said an adviser to the
fund’s managing director.
Teresa Ter-Minassian, adviser to Dominique Strauss-Kahn, said the IMF expects the world economy to
contract by 0.6 percent this year, down from October
2008’s prediction of 0.5-percent growth, the Financial
“This is a true global crisis, impacting all parts of the
world and countries at different levels of development,”
© 2009 United Press International. All rights reserved.