New York (Reuters)-U.S. commercial real estate investors expect sales of real estate more next year as lenders intensify foreclosures to satisfy the hunger of distressed properties, a survey of influential said on Wednesday.
But they are wary of the American economy and will continue to flock to higher quality properties whose lace cover mortgages, according to real estate trends emerging in 2011. The report, the Urban Land Institute and PricewaterhouseCoopers, interviewed about 875 owners, developers, consultants, investors, lenders and other businesses owned. later were interviewed about 275 of respondents.Respondents said callbacks will revert to basic real estate, paying a price that can withstand rents.
"You can't make money with inversion;You should be able to manage assets at the property level, "the report said quoting an interview. Respondents expect lenders well funded, such as insurance companies, to be able to negotiate good rates. they also expect borrowers well-capitalized, such as real estate investment funds, to be among the main purchasers. About $ 1.4 trillion U.S. mortgages on commercial real estate-including apartment buildings, hotels, office buildings, distribution centers, malls and shopping centers-are expected to mature between now and 2014, according to Trepp, a provider of real estate loan data.Borrowers must find new loans to replace the aging and they probably will face less generous lenders.
This means that the money must come from other investors, higher cash flows properties or pocket of the borrower. If not, borrowers could face foreclosures of lenders willing to face the recording downs on their loans. Experts said there arose a lot of money to buy properties in anguish.But for the past two years, their efforts have been frustrated by lenders extending maturities instead of exclusion and take back properties.
Respondents expect their creditors to let go more loans, gradually and terminate and sell more properties in 2011 and 2012.These sales should result in property values are 30% to 50% below the peak 2007, the survey said.
The majority of respondents believed that capitalization rates or revenues over the first year of ownership, will be stable or shift down to the end of 2011 as the increased demand.Like bonds, capitalization rates move in the opposite direction of prices. With balance sheets of banks recover and commercial mortgage-backed securities (CMBS) reliving slowly, borrowers must have better chances of getting the refinancing, if they have relatively well-leased properties, cash-generating.
But owners with properties over-leveraged with vacancies rise and fall of rents could face the loan more hostile environment, increasing the likelihood of foreclosures.That could pave the way for investors with money to adjust the properties that can be prices bottom contributing money for debating owners and earning a shareholding or they could buy distressed loans and eventually owning property or purchasing properties in foreclosure auctions. Still respondents were concerned that the pent-up demand for high quality buildings will take the fierce competition that will raise prices in major u.s. markets, mainly, New York and Washington, D.C., but including San Francisco, Boston and Seattle.
Interviewed and surveyed expect stable capital returns for properties around 7.5 percent for institutional investors and 8.2 percent for real estate investment funds for riskier investments, callbacks were seen in the mid 30s, the survey said. Still any recovery in real estate would be countered by a slowing u.s. economy, said global. "There is a huge anxiety continued about whether or not we'll see a double dip (recession). If we see a diving double macro economy is likely to have an impact on the real estate economy," said Mitchell Roschelle, partner at PricewaterhouseCoopers.
"Even though we don't see a double diving, deep belief was the economy, no matter how long it takes, will be without a job for awhile." The number one concern in economic report was the growth of employment. number one concern was refinancing real estate. Prospects vary slightly pessimistic, believe that the economy will rebound in some points. for those who were "sad" and said the slowdown could last 10 years.
(Reporting by Ilaina Jonas; editing by Andre Grenon)
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