PriceWaterHouseCoopers bearish on Canadian commercial real estate
“The credit crisis and ensuing recession have dragged commercial real estate markets into very trying times, marked by value losses, rising foreclosures, and reduced property revenues,” says Frank Magliocco, partner and leader of PwC’s Real Estate practice in Canada. “There is simply scarce money and therefore limited buyers.”
“Owners need to immediately implement monthly or quarterly cash flow reviews to understand exactly what their short-, medium- and long-term capital needs are and, perhaps even more importantly, immediately identify what options are available to overcome inevitable refinancing hurdles,” notes Magliocco. “In some cases, a formal restructuring process, equity injection or other non-traditional strategy may be beneficial.”
Furthermore, certain owners of CRE should consider divesting non-core or underperforming properties as a means to generate cash or capitalize on growth. On the other hand, well-capitalized investors may want to see if value can be extracted from the downturn via opportunistic acquisitions.
How can I be surprised? Businesses are suffering because of the weakened economy and will likely suffer more with hyper-inflation. Better to be prepared and bearish than optimistic and bull----- crap.
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