Wednesday, January 7, 2009

The Debts of the Spenders: Commercial Real Estate To Get Its Own Bailout

Commercial real estate companies, the U.S. Chamber of Commerce and other business groups are pushing Congress for a temporary tax break on forgiven debt similar to relief given in 2007 to homeowners facing foreclosure.

The provision would let solvent businesses negotiate new terms with lenders, lowering the amounts they owe, without being required to pay taxes on the forgiven portions of the loans. The proposal may emerge as a priority among Republicans for inclusion in a stimulus package that President-elect Barack Obama seeks to pass with bipartisan support.

About $270 billion of mortgages on shopping malls, apartment complexes and office buildings must be refinanced in 2009, according to Barclays Plc estimates. Commercial loan defaults will accelerate as banks and insurance companies rein in lending to manage their balance sheets and as the market for commercial mortgage-backed securities stays shut, Fitch Ratings Ltd. said in a Nov. 17 report.