The first in the series of speakers for the Real Estate Executive Insight Series spoke last Tuesday night at the Minneapolis Campus of UST. The first speaker was Dave Rasumssen, Senior Vice President and Office Manager of the Minneapolis office of Grandbridige Real Estate Capital. Grandbridge is one of the largest commercial lenders in the U S. Dave has been in the commercial real estate lending business for over 25 years. He has a great depth of knowledge in all areas of commercial real estate lending having acted as a lender, an investor, a borrower, buyer, and a seller. Dave shared his views on what has happened in the real estate financing business that lead to where we are now, what is currently going on in the market, how deals are getting done now, and his thoughts as to where we go from here.
Dave discussed the circumstances that led to the rapid decline in commercial real estate values and the credit crunch that we are now experiencing. During the 1990’s real estate lending was primarily funded by a combination of banks, life insurance companies, and Wall Street, also known as Commercial Mortgage Backed Securities (CMBS). The CMBS market collapsed in mid-2007 followed by the the financial crises in September of 2008. After that investment capital became scarce and credit was very hard to get. He estimates that on the average commercial real estate values have declined 40% in the last three years. Values are now coming into line with the availability of capital. Development and sales transactions came to a virtual standstill in 2009. While Dave feels that 2010 will be a better year than 2009 there are still some major problems ahead. There are still billions of dollars of commercial real estate loans that are coming due within the next two years. These loans will have to be refinanced under much tighter credit standards that will make this a very painful process for many borrowers.
The next Real Estate Executive Insight Series presentation will be Tuesday Feb 23rd at 6:00 in room 203, Terrance Murphy Hall at the downtown Minneapolis campus of UST. The featured speaker will be Mary Bujold. Mary is the president of Maxfield Research. She will be sharing her views on the local real estate markets and the role of market research in today’s challenging real estate market.