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The Good, the Bad and the Government

NEW YORK CITY-The three speakers at REBNY's TARP, TALF and PPIP Seminar, 'Will They Resolve the Credit Crisis,' offer positives, negatives and trends.

By Ryan Clark | Updated on April 15, 2009

[IMGCAP(1)]NEW YORK CITY-Across the street from Citigroup, a pariah of the floundering economy, the Real Estate Board of New York assessed the governmental efforts to mitigate the tide of debt rolling irrevocably towards the country’s shores. The TARP, TALF and PPIP seminar titled: “Will They Solve the Credit Crisis?,” brought in three speakers–Jeffry DeBoer, president of the Real Estate Roundtable; Schecky Schechner, managing director investment banking for Barclays Capital; and Robert Knakal, chairman of Massey Knakal Realty Services, Inc.–to address the crowd of real estate professionals in REBNY’s Mendik Center, on the pluses and minuses of the current and future government programs.

DeBoer began with the traditional warning: “I’m here from Washington [DC] and I’m here to help.” The dominating issue at hand in commercial real estate, DeBoer pointed out, is value and how this will be handled through enacted programs and legislation.

As DeBoer says he explained to government officials, “Commercial real estate debt is like vintages of wine. There are good vintages and bad vintages.” Real estate value in the country measures at roughly $6.5 trillion, which currently is split almost 50/50 between debt and equity, he explained, whereas it used to be around $1 trillion of debt–meaning it tripled over the last year or so. About 83% of that debt comes from banks and CMBS. And the clock is ticking for a resolution, since about $1.2 trillion will come due between 2010 and 2011, DeBoer said, highlighting the problem, since “sources of capital are gone when debt has come due.”

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