Commercial real estate still looking for a lift

June 17, 2009

Chalk up another stumble for TALF, the Fed’s program to revitalize the securitization market. After expanding the program to include commercial mortgage-backed securities, the Federal Reserve on Tuesday reported that no one showed up to take advantage of the central bank’s attractive financing.  Granted this was the inaugural round for loans to investors with eligible CMBS collateral, so it may take some time to take off.

But it certainly sends a worrying signal about how much this program will help unclog the frozen CMBS market – essential if developers and commercial real estate owners hope to refinance loans coming due.

Deutsche Bank estimated in April that of the $685 billion of commercial mortgages packaged into CMBS, approximately $236 billion will mature by the end of 2013.

But frozen credit markets are only part of the problem. Deutsche also notes that good portion of these loans originated in 2005 and 2007 won’t even qualify for refinancing due to tighter lending standards in place.

Reuters story notes that TALF is stirring some activity among issuers, though, so that’s something. But there’s still a long way to go.

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