According to a Congressional Oversight Panel Report made on Feb. 10, 2010: “Between 2010 and 2014, about $1.4 trillion in commercial real estate loans will reach the end of their terms. Nearly half are at present underwater… Commercial property values have fallen more than 40 percent since the beginning of 2007.”
Despite the difficulties commercial real estate is facing, there are opportunities for entrepreneurs interested in the industry. Commercial properties bring about some high-quality investments. Additionally, there are an abundance of options for commercial property owners to survive the current hardships being faced.
For example, an available option is the Tax Increment Financing (TIF) Program. With the TIF Program, money from a sold bond goes directly to developers or property owners in the form of a municipal bond so they may continue with the project. It’s not a loan because a development’s taxes are utilized to pay the principal and interest back on the bonds. There are plans to utilize the TIF program with the rebuilding of Lower Manhattan, which includes the World Trade Center area, as a revenue source for this development project. However, the Tax Increment Financing Program can be used for any size project that helps further the community it is in.
These types of tax credits are increasingly available as well as especially beneficial for developers of affordable housing projects. If a condominium project is in danger of defaulting on their loans due to lack of sold units, commercial mortgage investment companies can restructure the plans for the condominium property. It can be achieved by converting it into an affordable housing project, which includes housing for low-income families, the elderly, and persons with disabilities.
Another option is the American Recovery and Reinvestment Act of 2009, where housing and other commercial real estate projects can be funded for energy efficiency upgrades. There will be $6 billion for energy efficiency and conservation grants for housing and other commercial buildings. Additionally, $5 billion will be available for low-income housing weatherization assistance and $2 billion for the efficiency efforts with federally assisted housing projects.
Many commercial real estate owners and entrepreneurs are not aware of the multitude of opportunities available to avoid loan default. A resourceful Mortgage Investment Company can help you discover them. These trained professionals discover funds and resources that you may not know are accessible in addition to helping you simplify the mortgage restructuring process. There are also funds available through the creation of joint ventures among investors, developers and commercial real estate owners.
Such connections could aid in the prevention of many commercial mortgage loan defaults by allowing owners/developers and investors to share resources and minimize risk. In order to avoid default, commercial property owners can work with investment companies to find investors to partner with and optimize the return on a property. Joint ventures allow investors to strengthen a commercial property and provide the owner with additional resources for the property. A Mortgage Investment Company can help foster this type of partnership in order to avoid loan default.
The commercial real estate industry is expected to experience the next big collapse in this already faltering economy. Commercial loans are defaulting at an ever-increasing rate. Despite these issues, there are opportunities for commercial property owners, developers and investors to work together with the help of mortgage restructuring companies to avoid loan default. Contact a Mortgage Investment professional to help start your commercial debt restructuring today.