NPR reported this also today. So the hotel industry may indeed be the
next to bite the bullet. If so, then we may not see much hotel-building
on 40th St. or anywhere else next year.
Of course, Penn can't do anything else with the property either in the
meantime. In that case, the property would just sit there abandoned for
a spell longer.
When credit comes back again, Penn would surely try to do something with
the site again and take another spin on the wheel. Who knows if Hilton
would still be interested, or who else might be?
-- Tony West
I don't think that the wonderful folks who want to ruin the visual
aesthetics and overall ambience of our neighborhood with a
cheesy-looking monstrosity of a hotel at 40th & Pine are headed for
bankruptcy (assuming, that is, they don't have massive debt from other
projects coming due). But I think there's a serious question as to
whether they can get their paws on the money it will take to carry
through the project, despite what may have been the outlook when this
whole messy business began, owing to the economic malaise now worrying
apparently everyone but Tom Lussenhop (who probably doesn't money to
worry about, which may be why he's so dogged about getting this moving).
As an indication of what I mean, here's an article that appeared in
today's Wall Street Journal. Synopsis, if you don't want to read all
the long, boring passages ... there's no money for real estate
development these days. Period.
If Campus Apts & company have the money already committed and locked
up, let them give us proof that it's sitting there ready to be spent
on the project.
Al Krigman
------------------------------------------------------------------------
------------------------------------------------------------------------
**
*Developers Ask U.S. for Bailout as Massive Debt Looms*
*by Lingling Wei and Jon Hilsenrath*
With a record amount of commercial real-estate debt coming due, some
of the country's biggest property developers have become the latest to
go hat-in-hand to the government for assistance.
They're warning policymakers that thousands of office complexes,
hotels, shopping centers and other commercial buildings are headed
into defaults, foreclosures and bankruptcies. The reason: according to
research firm Foresight Analytics LCC, $530 billion of commercial
mortgages will be coming due for refinancing in the next three years
-- with about $160 billion maturing in the next year. Credit,
meanwhile, is practically nonexistent and cash flows from commercial
property are siphoning off.
Unlike home loans, which borrowers repay after a set period of time,
commercial mortgages usually are underwritten for five, seven or 10
years with big payments due at the end. At that point, they typically
need to be refinanced. A borrower's inability to refinance could force
it to give up the property to the lender.
A recent letter sent to Treasury Secretary Henry Paulson, and signed
by a dozen real-estate trade groups, painted a bleak scenario: "Right
now, we believe there is insufficient systemic capacity to refinance
expiring, performing commercial real-estate loans," said the letter.
"For many borrowers, [credit] simply is not available," the letter noted.
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