Wednesday, March 3, 2010

Proposal to Jump-Start Commercial Real Estate Markets with Benefits for Investors & Lenders

ICSC Community Real Estate Investment Proposal Gains Traction
Serving the Global Retail Real Estate Industry
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ICSC is moving forward with a proposal that was unveiled before the ICSC Board of Trustees last month and is presenting it to Capitol Hill as an incremental solution to the current credit crisis in commercial real estate. On February 11 the Congressional Oversight Panel of the Troubled Asset Relief Program reported that between 2010 and 2014 about $1.4 trillion in commercial real estate loans will reach the end of their terms and nearly half are “underwater,” meaning the borrower owes more than the property is worth, we believe the timing of our proposal is critical.

ICSC’s plan provides temporary tax incentives to attract new equity to existing commercial real estate projects. The incentives include accelerated depreciation on the investment and deduction of losses without being subject to passive loss limits.

ICSC's proposal is designed to attract new equity capital to commercial real estate, with the requirement that at least 80% of the new invested capital be used to pay down commercial bank loans of existing projects, thereby reducing the excessive debt ratios that threaten the commercial real estate and banking sectors, as well as the broader economy. If enacted, this concept will not only assist ICSC's largest segment of members (small and medium private owner/operators) but also community and regional banks and Main Street businesses around the country. According to the Oversight Panel’s report, it is these small and mid-sized banks that may bear the brunt of coming losses on commercial real estate loans. The report found...

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