One trend emerging in commercial real estate mirrors a similar course in the housing market: Property owners are choosing to default on debts for buildings not worth the value of their loans, just as some homeowners leave mortgaged houses that have lost a good portion of their value.
This isnb t a matter of these commercial property owners—including Simon Property Group Inc. and Macerich Co.—not having the money to pay these debts; they do. Theyb re just looking at it as a sound business decision, as explained in this Wall Street Journal article.
Although a huge question arising from homeownersb defaults is if they are morally obligated to pay off their debt, people in the business world arenb t putting as much of a stigma on property owners choosing not to pay and giving up buildings with values less than their debts.
How do you feel about commercial property owners choosing to default? Just click on b leave a commentb to weigh in with your thoughts.
Photo from realestatechannel.com
Tags: buildings worth less than their loans, Commercial Real Estate Trends, loss of value, property owners default on debts
