Government Affairs Talking Points: Stabilize and Provide Liquidity to Commercial Real Estate Markets
Congressional Action Needed:
Address the crisis in the commercial credit markets by extending the term of Term Asset-backed Securities Loan Facility (TALF) loans used to finance the purchase of Commercial Mortgage Backed Securities (CMBS) beyond the current permissible three year limit and enhancing federal tax policies that strengthen the commercial real estate market.
Congressional Actions to Date:
- Mark-to-market accounting: Lawmakers and industry representatives made Mark to Market more flexible.
- The American Recovery and Reinvestment Act of 2009, the $787 billion economic stimulus bill included tax and spending provisions helpful to commercial real estate, primarily in the areas of green building and energy efficiency, business tax incentives, and investment in transportation and infrastructure.
- The Emergency Economic Stabilization Act of 2008 (EESA) provided the funding and the authority for the Troubled Asset Relief Program (TARP).
What to Tell Your Members of Congress:
- Having a sound and functioning commercial and multifamily real estate sector is critical to our country’s economic growth and development.
- NAR strongly supports the Treasury’s decision to expand the initial reach of the TALF program to include CMBS. TALF loans used to finance the purchase of CMBS must be extended beyond three years to accommodate the longer term nature of commercial real estate lending.
- Congress must maintain the capital gains tax rate at the existing 15%.
Issue Background:
- While the commercial and multifamily real estate industry plays a vital role in the economy, it now faces its worst liquidity challenge since the Great Depression. Hundreds of billions of dollars of commercial real estate loans are expected to mature in 2009 and over $1 trillion in the next few years. Under current conditions, there is insufficient credit capacity to refinance this wave of loan maturities.
- With no liquidity, commercial borrowers face a growing challenge of refinancing maturing debt and the threat of rising delinquencies and foreclosures, which could result in widespread systemic damage.
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