Investcap Advisor LLC
The market is winding down for the year, and uncertainty persists as to whether the dark clouds on the horizon will bring more stormy weather or move away from us and leave a relative calm in the our market. In the opinion of this market participant, the storm will pass over us and bring rain at least for the next three years. Sorry I am not able to spread more holiday cheer. The major headwind that no liquidity facility or amount of optimism will be able to overcome is the $1 trillion in commercial real estate financing that is coming due over the next three years. True, fresh equity will enter this space, but only under terms that make it senior to the existing equity and perhaps after obtaining a partial loan write-down from existing lenders. Market forces will exert pressure toward the realization of these losses. Some projects are so far under water that no realistic
level of recovery will bounce them back to their original basis.
Bargain hunters will have plenty to choose from over this time period.
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