Credit Squeeze Dominants Market

Credit Squeeze Dominants Market
MIAMI, FL - Real estate industry leaders attending the Akerman Real Estate Summit in Miami earlier this month said that while credit markets are loosening to some degree, high-volume credit remains tight and a major concern for the industry in 2010. Additionally, the survey of some 200-industry executives indicated that an excessive inventory of distressed properties is also inhibiting industry recovery. Those attending the Akerman Real Estate Summit included asset managers, builders and developers; REITs; regional and national lenders; hospitality groups and government agencies.

"The credit markets may be thawing, but credit terms and a shortage of capital still remain as significant roadblocks for stalled development projects and refinancing of maturing commercial loans," said Richard Bezold, Chair of Akerman's Real Estate practice. "The results of our survey overwhelmingly indicate that the credit squeeze continues to stifle development and refinancing activity and remains a persistent challenge for our industry."

The survey respondents were asked to rank in order of importance the most pressing issue presently facing the real estate industry. Seventy-nine percent of the respondents indicated that availability of credit and refinancing challenges were the most important issues. Notably, 44% of respondents indicated that, after credit issues, inventories of distressed property and its subsequent effect on pricing was the most important issue. This point was echoed with 88% of respondents indicating that the federal government needed to address lenders' ability to write off non-performing loans. Additionally, 62% of survey respondents said that real estate deals in 2010 would be mostly financed by private equity, with lender financing coming in a distant second.

When it came to the future of the industry, specifically related to green building trends, the respondents surprisingly noted that green building standards are viewed by the industry as a positive growth trend. Forty-seven percent of respondents called green building a matter of social responsibility, while 42% said it was a necessity, and in most cases a customer demand. Notably, in this economic climate, the third most popular answer (with more than one-third of respondents) acknowledged there was economic benefit in the adoption of green building standards.

This stands in contrast to a recent study published by the Urban Land Institute, in partnership with Akerman Senterfitt, that indicated the real estate industry viewed retrofitting or the developing of properties to meet green building standards as a victim of the economic downturn. The new results suggest that as the economy recovers, views toward green building practices are becoming more positive.

"With tenants demanding building retrofits and energy efficiencies, green building practices are becoming a competitive necessity for the real estate industry," said Cecelia Bonifay, Chair of Akerman's Green and Sustainable Development practice, which is one of the top 5 teams in the U.S. in number of LEED accredited lawyers. "Lenders, developers and asset managers have realized that sustainable development can mean smart, profitable business for the long-term."

Other highlights from the survey results include:

54% of respondents believe residential is the real estate sector best positioned for a recovery. 20% of respondents chose the industrial sector.

65% of respondents believe that large inventories of lender-owned properties are preventing a recovery in the commercial real estate industry.

Only 12% of respondents felt that uncertainty of government policy was a significant issue for the industry.

With more than 140 lawyers, Akerman's Real Estate practice represents clients in complex real estate transactions, development and redevelopment projects, public-private initiatives and litigation matters. Akerman's lawyers manage the legal aspects of large land deals and major construction projects, assist developers in meeting environmental regulations and green building standards, conceptualize and obtain development incentives, advise on all aspects of transactional work, including leasing, acquisitions, sales, financings and loan restructurings, and represent clients in disputes and litigation.

Akerman is ranked among the top 100 law firms in the U.S. by The National Law Journal NLJ 250 (2009) in number of lawyers and is the largest firm in Florida. With more than 500 lawyers and government affairs professionals, we serve clients from major business centers in Florida, New York, Washington, D.C., California, Virginia, Colorado, Texas and Nevada.
Source: Akerman Senterfitt

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