The End of Extend and Pretend

Repricing may help markets recover 

Commercial real estate has spent the last three years in a strange kind of limbo. Properties lost value, refinancing markets froze, office demand weakened, and yet relatively few buildings actually traded hands. Instead of forcing losses, lenders extended loan maturities and hoped that lower interest rates or a rebound in office demand would eventually solve the problem. The industry called it “extend and pretend,” and for a while it worked well enough to avoid a broader panic. But now that strategy is beginning to break down, and that may not be entirely bad news for the market.

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RSK: They days of extend (the loan) and pretend (things will recover) are coming to an end....and that may be a good thing.