...Richard Green, director of the Lusk Center for Real Estate at the University of Southern California, said commercial real estate investors are most concerned about their ability to refinance loans during the next one to three years, since the most active lenders until last year - CMBS conduits - are out of the market.
"Banks are nervous too," Green said. "There are few that will be able to do it, so they will have the pricing power." While the commercial real estate underlying loans that will need refinancing is most likely doing pretty well, he said building owners will be squeezed by more arduous terms and that will put pressure on property values.
"When the cap rate goes from 5 to 6 percent, that's a decline in value of 16 or 17 percent," Green said. "There could be properties that are doing well right now that are not going to be able to refinance. We could start to see defaults."...