A land of opportunity for investors amidst our current economic market conditions

With the election of Barack Obama as the 44th President of the United States. the U.S. has renewed its global status as the land of opportunity. Amidst all of the negative economic news I would also argue that the commercial real estate market represents a land of opportunity for investors in 2009. It is hard to be positive with all of the negative news bombarding us from every direction. Everyone is well aware of the recent happenings at Fannie Mae, Freddie Mac, Lehman Brothers, AIG, Bear Sterns, Washington Mutual, Merrill Lynch and Wachovia and of the suffering stock market. Those familiar with finance and commercial real estate finance in particular are also aware of the troubles plaguing the CMBS market. Uncertainty stemming from the credit crunch and the deteriorating economy has led to a continued pull-back among lenders resulting in a lack of liquidity in the financing markets. Many investors and owners of commercial real estate have also begun to conserve capital, not knowing how the slowing economy will affect property fundamentals. This has led to a prolonged pause in many aspects of commercial real estate activity. James Grant, a Wall St. commentator, in his book "The Trouble with Prosperity" said, "If things seem splendid, they will get worse. Success inspires overconfidence and excess. If things seem dismal, they will get better. Crisis spawns opportunity and progress. It is definitely true that the overconfidence investors had in real estate, that property values would continue to rise indefinitely, is a major cause of the current credit crisis. From the crisis ample commercial real estate opportunities have arrived for experienced developers and investors with cash. There is also financing available for solid projects in good locations with strong borrowers." Many experts are predicting a decline of 15 to 20% in commercial property values on average from peak values in 2007.  Despite this, the decline in property values represents an opportunity for liquid investors to acquire properties at a very attractive cost basis. Many commercial property owners are looking to sell rather than risk further declines in property values or increasing vacancies. Lending institutions are also looking to sell properties they have foreclosed on or notes for loans they closed at the top of the market in 2007. Buyers of these properties and notes are achieving deep discounts in some cases. There will also be pockets of opportunity throughout the country, upstate New York being one of them, where property values remain somewhat stable. In these markets good financing deals are still available. With the CMBS market "on the sidelines" for the foreseeable future there has been a lack of liquidity in commercial real estate financing. In 2007, CMBS lenders closed over $240 billion in commercial real estate loans. While banks, insurance companies, pension funds and credit corporations (the other main players in commercial real estate finance) cannot fill that void entirely many are now ramped up for big years in 2009. As a national mortgage company, U.S. Realty Capital has relationships with numerous financial institutions that are actively closing commercial real estate loans and have large allocations for 2009. Non-recourse, competitively priced fixed-rate loans are still available in the market for quality general purpose properties, with good locations, stabilized occupancies, and sponsored by financially strong and experienced borrowers with solid credit. Floating rate construction and bridge loans are also obtainable. LIBOR, the typical base rate for floating rate loans, has declined dramatically in recent weeks making current rates on these deals very attractive. Now more than ever developers and owners of commercial real estate are turning to commercial mortgage professionals to help guide them through the uncertainty of the strained financial markets. Although less favorable than recent years, current rates and terms remain attractive by historical standards. U.S. Realty Capital has the experience, knowledge, integrity and relationships to allow investors to take advantage of today's opportunities by ensuring the most favorable financing terms available in the market. U.S. Realty Capital is a national mortgage banking company with nine offices across the country. Providing creative capital solutions for commercial real estate owners and developers throughout the U.S. in 2007 U.S. Realty Capital originated $1.4 billion of debt and equity for their clients. Through their collective knowledge and industry experience, U.S. Realty Capital provides comprehensive project analysis and competitive solutions for the unique needs of each client and project. Rob Pisanelli is a vice president at U.S. Realty Capital, Rochester, N.Y.