By Rico Setyo
The commercial real estate industry has already been forecasted to collapse. The Federal Deposit Insurance Corporation closed Corus Bank which can be seen as the beginning of “the next shock to the banking system” which would be commercial real estate. The lack of new debt will hurt many people especially inside the industry. There are three signs to look for to see how badly and when will the collapse of the industry happen: Special Servicers, Big Projects, and Regional Banks.
Capmark Financial Group is one of the largest commercial real estate lenders and they have recently filed for bankruptcy protection due to bad debts. The company has been looking at Chapter 11 Bankruptcy since September and they have finally filed. Chapter 11 bankruptcy is the restructuring of the organization and the debt it owes. Mohsin Meghji, the company's chief restructuring officer said that "the Chapter 11 process will give Capmark the opportunity to restructure our balance sheet while continuing to focus on maximizing value for our principal stakeholders".
Many other players in the commercial real estate industry were forced to make the same the decision as Capmark. The mall giant company, General Growth Properties and hotel chain, Extended Stay Inc. filed for bankruptcy in the past year, and even more commercial real estate ventures could fail because of the inability to refinance debts and reduced customer traffic as consumers continue to pull back.
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