In the latest KPMG Global Business Outlook survey by KPMG International, 65 percent of U.S. manufacturing executives expect higher revenues, up from 52 percent in October, and a similarly strong 57 percent of U.S. service sector executives believing revenues will increase, up from 47 percent in October. Profit expectations also rose, with 62 percent of manufacturing executives and 58 percent of service sector executives believing profits will increase, up from 47 percent and 41 percent respectively.
Well then, with that optimism and some of the largest multinationals reporting billions and billions of dollars in profits, isn't it time to start pumping some money into hiring more employees? Plus, manufacturing sector executives believe the economic recovery is strong and sustainable, and that improved business activity will result in higher prices that consumers will be able to absorb.
Yes, I know, productivity is important and should be a focus. The problem, as I see it, is when U.S. employers use productivity as an excuse not to hire. Get hiring, lower unemployment and we should see the economy hum and our real estate investments produce like we had hoped when we first invested in them.
Also we have so many opportunities coming on line that you will need the help to capitalize.
According to a recent CoStar Group report by Mark Heschmeyer, there are 960 fixed rate loans representing $9.6 billion scheduled to mature by the end of the year, according to a Fitch Ratings' review of CMBS fixed rate commercial loans. Of these 960 loans, 103 loans representing $2.3 billion (23.3%) are in special servicing. Of those in special servicing, 27 loans (representing 48% by balance) are current.
The maturity breakdown by month through December is as follows:
- July: 148 loans, $1.7 billion
- August: 134 loans, $1.4 billion
- September: 154 loans, $1.1 billion
- October: 180 loans, $1.9 billion
- November: 161 loans, $1.6 billion
- December: 183 loans, $1.9 billion
Of the 148 loans maturing in July, 133, having an average balance of $8.5 million, are current and performing. Retail properties secure 40% of the loans (by dollar balance), followed by 34% office and 12% multifamily. By vintage, 57% of the maturing loans are from 2005 transactions, followed by 26% from 2000 and 8% from 2006 transactions. A majority of the loans have reported year-end 2009 results and have a weighted average debt service coverage ratio of 1.72 times.
While liquidity appears to be slowly returning to the market, the time it takes for borrowers to refinance has continued to be a lengthy process. Loans may remain with the master servicer for 60-90 days while the borrower works to close a new loan. In instances where a borrower is not responsive or has not provided documentation supporting their efforts to refinance; loans are being transferred to special servicing. The lack of liquidity in the market for refinancing mortgages coming due increases the likelihood of a transfer to special servicing for a modification or extension.
Of the 11 loans greater than $20 million scheduled to mature in July, Fitch expects eight loans to default at maturity based on its assumptions. The average loss expectation for these loans is less than 5%, with only four loans being modeled with an expected loss.
So that boils down to…time to add some employees.