Lenders Try to Make Headway in Distress

NEW YORK CITY-By the Federal Reserve’s estimates, the commercial real estate industry is about five years out from the maturity of the wealth of CMBS debt. In the interim, Tony Thompson, chairman and CEO of Thompson National Properties, believes the industry will be able to address a significant portion of the distress snaking its way through the market.

Giving the opening remarks at Information Management Network’s Bankers Forum on Distressed Properties today, Thompson said the industry may be “finding the bottom in quicksand,” but commercial real estate is not the powder keg destined to destroy recent economic gains. The rebound of equity REITs and the existence of private equity eager to snap up distressed deals, he noted, bodes well for the market, and may mitigate some of its troubles.

Still, the trillions in debt slated to come due is a pressing concern, especially for lenders who must determine the feasibility of workouts versus resolutions. Thus far in the cycle, lenders have been more inclined toward workout propositions, encouraged by regulatory guidance.