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Industry Tackles Troubles Without TARP

LOS ANGELES-Regardless of whether the government decides to buy or not buy distressed commercial assets, the industry gears up to service them.

By Bob Howard | Updated on November 23, 2008

LOS ANGELES-One of the factors driving down the prices of commercial mortgage-backed securities recently—along with the uncertain economy and the frozen credit markets—has been disappointment by some holders of CMBS that the government has thus far chosen not to employ its Troubled Asset Relief Program to buy distressed real-estate assets from shaky financial institutions. That could change, of course, if the current administration changes its mind or the new administration chooses to change the way that TARP funds are applied.

Regardless of whether the government decides to buy or not buy distressed commercial assets, however, the commercial real estate industry is gearing up to service those troubled loans and properties–which it is going to have to do with or without TARP funds in the mix. “Even if TARP were to buy these assets, regardless of whether it bought debt or hard assets or both, somebody has to service those properties and those loans,” observes Conrad Andersen, senior vice president of global client solutions in the Newport Beach, CA office of Grubb & Ellis Co.

Andersen is one of the leaders of a new Grubb & Ellis Co. unit called the Financial Services Asset Management Practice that the Santa Ana, CA-based company has formed to serve financial institutions, special servicers and government agencies with troubled assets. He tells GlobeSt.com that the effect of the government’s decision not to apply TARP funds to commercial assets right now is neither positive nor negative but is “neutral” for the commercial real estate industry.

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