Morning Briefing: Commercial Real Estate Plunges
Commercial real estate, which has long been a major industry in the Washington area, is looking to chalk up one of its worst years since the bust of the early 1990s reports staff writer Dana Hedgpeth.
"In the Washington area, there is a concern that new developments won't break ground, as it is harder for developers to get loans. The sales market, which had been considered a hot spot for out-of-town and foreign investors, is slowing from an unprecedented run last year," Hedgpeth writes.
Developer Douglas Jemal says he would normally have bought and sold 30 buildings and properties by this time in a year, but has only moved a handful. In the past three months, he has done none.
"This is worse than in the late 1980s and 1990s," he tells Hedgpeth. "Real estate was depressed then, but banking institutions didn't stop lending. Now you can't get money even for a good deal."
Cities such as Philadelphia and Chicago -- as well as Alexandria and Arlington -- are now left "disconnected and discontent," reports staff writer Kim Hart today.
In election news, Maryland voters gave their blessing Tuesday to slot machine gambling.
In earnings news, Chevy-Chase CapitalSource reported a 72 percent drop in third-quarter earnings as income from interest declined and the company prepares to transition from a real estate investment trust to a bank.
The company reported net income of $8.1 million (or 31 cents per share) in the quarter ended Sept. 30 compared to $28.3 million ($1.02 per share) in the third quarter a year ago. The company said investment income fell to $332.1 million from $400.9 million.
CapitalSource announced last week that it is dropping its status as a real estate investment trust, will decrease its debt load and focus on its commercial banking business in its transition toward becoming a bank holding company.
"CapitalSource Bank is off to a terrific start," John K. Delaney, chairman and chief executive of CapitalSource, said in a statement. "We are capitalizing on the attractive lending opportunities presented by this market. Consistent with our FDIC approved business plan, we are also pursuing our strategy of converting to a commercial bank and becoming a bank holding company."
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