Florida commercial real estate developers may have heard that Deutsche Bank was fined $14 billion by the U.S. Department of Justice for the way in which it issued residential mortgage-backed securities prior to the 2008 housing crisis. This move could impact the commercial real estate market in several ways.
Deutsche Bank is one of the largest foreign originators of commercial real estate loans. The fine could lead the bank to reduce its activity in that area. The bank has just $6 billion in reserves designated for litigation, far short of the amount of the fine that was announced. A spokesperson for the bank said that it will work to negotiate a significantly reduced amount.
The bank is also one of the biggest players in the commercial mortgage-backed securities market in the U.S. With the huge fine and the problems posed for Deutsche Bank, other banks may also be more reticent to originate commercial real estate loans or to issue CMBS, making it more difficult for developers to secure financing for their commercial real estate projects or to refinance loans that are maturing.
Commercial real estate developers who are facing financial difficulties with their ongoing projects may need help to identify and secure financing so that their projects may move forward. A real estate lawyer might assist a client in identifying alternative funding options if traditional commercial real estate loans are unattainable. Legal counsel could also negotiate the terms of any proposed loan offers in order to try to get the client the most favorable terms and rates that are possible.