Now US property developers want bailout

23 December 2008

The US government will soon have to print money as fast as a super computer does, in order to meet the ever increasing demand for bailouts with commercial property developers asking Uncle Sam a portion of the Federal Reserve's $200 billion asset-backed plan to avoid defaults, foreclosures and bankruptcies.

According to the Wall Street Journal, quoting research firm Foresight Analytics LCC, commercial property developers will be next in line to crash with $530 billion of commercial mortgages coming due for refinancing in the next three years, out of which $160 billion coming due in the next year alone.

With banks still refusing to lend in spite of being injected with tax payers money and told to start lending to get the economy moving again, property developers have issued warnings to lawmakers that thousands of office complexes, shopping malls, hotels and other commercial buildings are facing the grim prospect of defaults, foreclosures and bankruptcies.

The commercial property developers want the Treasury Secretary, Henry Paulson to include them in the recently announced government $200 billion loan package called the Term Asset-Backed Securities Loan Facility, which was set up to fund student loans, car loans and credit card debt.

While announcing the TALF package, Paulson had said that the TALF could be expanded to include ''commercial mortgage-backed securities," but this package is expected to take shape only in February next year.

Trade associations of the US commercial real estate industry had met Henry Paulson last month to lobby for aid to its industry, as the main source of funds from the commercial backed securities (CMBS) market has totally dried up with only $20 billion in CMBS being issued this year compared to $230 billion last year and even the highest-rated triple-A bonds not finding any buyers.