Morning Brief: Commercial Property Debt Looms


Staff writers Dana Hedgpeth and Dan Keating take a thorough look Thursday morning at Washington's commercial property market. A third of the loans used to finance Washington area commercial buildings and then sold to Wall Street are coming due in the next five years, leaving investors scrambling to find new funding, they find.

Many owners of office towers, hotels, shopping malls and apartment buildings relied on interest-only loans and planned to refinance them when they came due. That's become increasingly difficult to do in the almost completely frozen credit markets.

If owners can't refinance their loans, they could be forced to sell at a time when their properties are worth less. They could lose money and be forced to lay off workers.
About $21 billion of these loans must be refinanced by the end of 2013, according to data from Real Capital Analytics, a real estate research firm in New York that tracks 4,284 commercial loans.

The Greenbriar Town Center in Fairfax is one example. The mall, whose tenants include a Giant grocery store, Petco and Marshalls, has a $73 million loan that comes due in July 2010.

The mall's owners typically wouldn't even start trying to find a new loan until six months before it matures, said Michael Mas, an executive with Regency Centers of Jacksonville, Fla., which owns the mall with partners. But with the uncertainty in the market, he is already talking to lenders about refinancing the mortgage and another $1.7 billion of loans that also come due in the next four years.

In other commercial real estate news, more than a dozen developers are vying to create a new destination on 67 acres along the Anacostia River, the last unclaimed parcel on Washington's waterfront. Staff writer Paul Schwartzman has the story here.

Congressional Quarterly, the Washington-based chronicler of all things related to Capitol Hill, was put up for sale Wednesday as its owner struggles with the decline in circulation and advertising roiling the newspaper industry.

Paul Tash, chairman of CQ's owner, Times Publishing of St. Petersburg, Fla., said in a statement that the company intends to direct its resources to its Florida publications, primarily its flagship newspaper, the St. Petersburg Times. No price was specified.

And buyout firm Allied Capital of the District said on Wednesday that the value of its investments in companies has declined so dramatically that it might default on its debt agreements, creating uncertainty over Allied's hefty dividend and its ability to borrow money in the future.

By Alejandro Lazo  |  January 29, 2009; 10:20 AM ET  | Category:  Economy Watch , Morning Brief
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Comments

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Landlords with debt not due for several years should not be worried unless their properties are in really bad financial shape. But even if they are, what kind of financing would they get?

For interest only loans coming due, it's either put in more capital or give up the building. It's time for the buyers of the early 1990's to come out and buy commercial properties on the cheap again!

Posted by: jake_adler | January 29, 2009 1:17 PM

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