COMMERCIAL REAL ESTATE AUGUST 25, 2010
By KRIS HUDSON And A.D. PRUITT
suprised at first by this info but makes complete sense, but still surprised more
'commercial defaults' stories haven't been appearing
"Like homeowners walking away from mortgaged houses that plummeted in value,
some of the largest commercial-property owners are defaulting on debts and
surrendering buildings worth less than their loans.
Companies such as Macerich Co., Vornado Realty Trust and Simon Property Group
Inc. have recently stopped making mortgage payments to put pressure on lenders
to restructure debts. In many cases they have walked away, sending keys to
properties whose values had fallen far below the mortgage amounts, a process
known as "jingle mail." These companies all have piles of cash to make the
payments. They are simply opting to default because they believe it makes good
business sense.
"We don't do this lightly," said Robert Taubman, chief executive of Taubman
Centers Inc. The luxury-mall owner, with upscale properties such as the Beverly
Center in Los Angeles, decided earlier this year to stop covering interest payments
on its $135 million mortgage on the Pier Shops at Caesars in Atlantic City, N.J.
Taubman, which estimates the mall is now worth only $52 million, gave it back to
its mortgage holder."
. . .
"Of the $1.4 trillion of commercial-real-estate debt coming due by the end of
2014, roughly 52% is attached to properties that are underwater, according to
debt-analysis company Trepp LLC." - more :
http://online.wsj.com/article/SB10001424052748703447004575449803607666216.html?mod=googlenews_wsj
By KRIS HUDSON And A.D. PRUITT
suprised at first by this info but makes complete sense, but still surprised more
'commercial defaults' stories haven't been appearing
"Like homeowners walking away from mortgaged houses that plummeted in value,
some of the largest commercial-property owners are defaulting on debts and
surrendering buildings worth less than their loans.
Companies such as Macerich Co., Vornado Realty Trust and Simon Property Group
Inc. have recently stopped making mortgage payments to put pressure on lenders
to restructure debts. In many cases they have walked away, sending keys to
properties whose values had fallen far below the mortgage amounts, a process
known as "jingle mail." These companies all have piles of cash to make the
payments. They are simply opting to default because they believe it makes good
business sense.
"We don't do this lightly," said Robert Taubman, chief executive of Taubman
Centers Inc. The luxury-mall owner, with upscale properties such as the Beverly
Center in Los Angeles, decided earlier this year to stop covering interest payments
on its $135 million mortgage on the Pier Shops at Caesars in Atlantic City, N.J.
Taubman, which estimates the mall is now worth only $52 million, gave it back to
its mortgage holder."
. . .
"Of the $1.4 trillion of commercial-real-estate debt coming due by the end of
2014, roughly 52% is attached to properties that are underwater, according to
debt-analysis company Trepp LLC." - more :
http://online.wsj.com/article/SB10001424052748703447004575449803607666216.html?mod=googlenews_wsj