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Top Commercial Real Estate Developers Request Government Bailout

By Jim Gillespie | December 29, 2008

The most successful, elite commercial real estate developers in the United States are now requesting to be bailed out by the Federal Government. They want to be included in a $200 Billion Government bailout program originally intended to support automobile loans, student loans, and credit card debt.

This really ticks me off as these principals and organizations were doing fine for many years under capitalism, and now they’ve decided that we as the taxpayers should be bailing them out. And it just doesn’t sit right with me.

In addition, they’re asking for the bailout money to apply to “highly-rated asset backed securities collateralized by newly or recently originated real estate mortgages.” And later on in their letter to Treasury Secretary Henry Paulson, they gave an example of these securities as being “AAA” rated ones. Which means that they want the bailout money to apply to the most visible, pristine and desirable commercial real estate properties in the country–in short, the kind of properties that these companies typically own themselves.

I guess all the other 95% of commercial real estate investors who don’t own these kinds of properties will just have to fend for themselves…kind of like all the rest of us.

I’m opposed to any bailouts. And I’m even more opposed to bailouts that will keep the commercial real estate market from correcting under its own momentum. Any bailout that seeks to stop this interferes with commercial real estate brokers earning and getting paid their commissions, because it allows owners to hold onto their properties when they would otherwise have to sell them. And simultaneously we the people would be funding all of this luxury for these owners, too.

Brokers in so many cities have been dealing with owners who won’t sell unless they get above-market prices. And buyers have been saying they won’t buy until these owners lower their prices. So if we just let the market continue to correct on its own, more owners will be forced to get realistic and sell at today’s fair market value. This is because as this recession worsens, more owners are going to need money. And to get the money some of them will begin selling their properties.

With so many commercial brokers having a tough time right now, the last thing they need is government interference in a market where more owners will begin getting realistic and selling their properties. This is the natural progression of things in a difficult economy, and while I sympathize with the owners and what they’ll be going through, my top priority has always been the brokers. And I want to see the brokers getting back to closing more transactions again.


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