REITs have capitalized themselves this year as debt and credit markets have reopened, Alex Goldfarb, REIT analyst at Sandler O’Neill, told CNBC. Sliding rents will depress earnings for 2010, but beyond that, investors can expect growth, he said. Goldfarb added that while there will be “a bit of pain” in commercial real estate’s near future, “the system right now is set up to try to work through the problem.” Harvey Green, CEO at Marcus & Millichap Real Estate Investment Services, agreed. “I don’t think we’re going to have that shoe drop that we’ve all talked about,” he said.

In order for the commercial real estate sector to improve in 2010, it is imperative that existing debt be paid off before anything else moves forward, Marcus & Millichap president & CEO Harvey Green told CNBC on Monday. “Since many smaller and mid-sized banks have not securitized their debts, they need to communicate with borrowers that they have confidence in to bring capital to the table,” said Green. He said it’s not question of bailing out developers or whether or not the debt crisis has hit, but a question of working through existing debt. While Class A properties and “trophy” retail spaces are being bought up by wealthy foreign nations like Abu Dhabi, the B and C class commercial properties are still struggling under large debts that must be paid in order for the commerical sector to improve, according to Green.

With Capmark’s weekend bankruptcy announcement looming large, Marcus & Millichap CEO Harvey Green sat down with Fox Business News to discuss what the commercial real estate finance firm’s troubles mean for the broader market. While some experts say that the firm’s turmoil is a foreboding signal for the commercial real estate industry, Green said that Capmark’s bankruptcy has more to do with how the firm was formed. “They [formed Capmark] for about $7 billion in debt and they needed to go out into the marketplace and they were competing at a very frothy time in the market,” Green said. “When you look at the situation you don’t get a firm like Berkshire coming in and making a $490 million offer on the servicing.”

Following major commercial real estate troubles, including a recent
loan default at the St. Regis in Dana Point, California, and 25 percent
decreases in revenue per room for Sunstone Group, the alarms are
sounding for commercial real estate. Companies are finding themselves
mired in debt, unable to refinance, Marcus & Millichap CEO Harvey
Green told CNBC. Not all companies are experiencing hardships, though.
CB Richard Ellis recently sold $100 million in stocks to hedge fund
millionaire John Paulson at ten dollars per share. Jay Leupp of Grubb
& Ellis also expressed some optimism for commercial real estate,
especially in the public sector. Public real estate investment trusts
have risen 18 billion dollars since November, Leupp said. “The first
turnaround will occur in healthcare and specialty sectors that have
been more recession-resilient with lodging, industrial, retail and
finally office space following,” he said. Comments