Many experts say commercial real estate is the next shoe to drop in the financial crisis.
But others say now is the time to buy, and investors apparently agree.
Real Estate Investment Trusts have raised about $12 billion through stock sales in recent months, Fortune magazine reported.
The REITs will use this money to purchase cheap distressed commercial properties. They certainly have a large pool to choose from. Real Capital Analytics estimates the total value of distressed U.S. commercial real estate at $90 billion.
"On top of those properties, there is hundreds of billions more in debt coming due in the next few years," Peter Slatin, editorial director at Real Capital, told Fortune. "Some REITs are getting prepared for that."
Among the REITs raising cash are blue chips Boston Properties, Regency Centers, Simon Property Group and Vornado Realty Trust.
"These are the commercial real estate companies that are going to survive," Jim Sullivan, senior REIT analyst with Green Street Advisors, told Fortune. "They all have balance sheets that are stronger than average and management teams that have proven their ability to take advantage of downturns."
Some companies, such as Cypress Sharpridge Investments, are even investing in mortgage-backed securities.
Not everyone is so enthusiastic, though. Richard Parkus, head commercial mortgage analyst for Deutsche Bank Securities, told Reuters that urban commercial real estate markets probably won’t recover until 2017.
"The froth is still working itself out," he said.
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