As the market continues to evolve, it appears the only remaining business activity is restructurings. Some things are starting to thaw in the leasing and occupancy rates across the country. Rental rates in multifamily retail are starting to creep up while office rates are stabilizing in different markets nationwide.

We’re now seeing the major hurdle in restructurings is maturities more so than the ability to meet debt service. There’s still not enough financing at rates that are compelling to lenders making most transactions undoable (unless the existing lenders will extend or provide financing).

We’re finding in a number of receiver type actions that the existing CMBS holders are willing to provide new financing to a new buyer through a receiver sale which REMIC regulations allow.

More insurance companies are taking advantage of the weak capital markets. CMBS requires the aggregation of assets, thus little CMBS will be offered during the next several quarters. There is not enough critical mass of financings going on today, even with the lower rates, to allow CMBS aggregations. The insurance companies are eating into that market share.

We believe regional banks will start to lend and begin syndicating loans out in these markets over time. Banks as well as investors are tired of very low rates and providing commercial mortgages provides a good spread income right now, as long as they underwrite in a conservative manner.

We believe that pricing, volume, and liquidity will improve late in the third quarter and in the fourth quarter 2010.

-Larry Selevan

Lawrence Selevan is Chairman and CEO of NAI Chesterfield Capital Advisers, a joint venture with NAI Global providing borrowers with restructuring advisory services.