Thursday, April 9, 2009

5-year Commercial "TALF" Loans in Works

The Federal Reserve might compromise with commercial real estate owners and investors and lengthen the terms of the Term Asset-Backed Securities Loan Facility (TALF) loans from three to five years while upping the interest rate.

Commercial real estate interests have been pressuring the Fed to extend TALF loan terms, but the Fed prefers to keep them short as a tool to fight inflation. Real-estate investors say a longer term is critical because an extra couple of years will help stabilize the market, which faces a mound of debt coming due in the next three years.

Charging higher rates for longer terms, “as a compromise, seems like it meets the needs of both sides,” said Louis Crandall, chief economist at Wrightson ICAP LLC. “It’s the certainty of the funding, and providing certainty goes a long way to address those concerns.”

Courtesy of Bloomberg, Scott Lanman (04/08/09)

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