Joe Clementsis co-editor of Debt & Equity Journal,from which this article is excerpted.
Boston—For commercial real estate borrowers, it is thefinancial equivalent of being caught on an elevator during ablackout. Rapid deterioration in the debt arena has halted manydeals mid-stream, and tales of sales in outright free fall aremounting throughout the CRE industry. After maintaining a calmdemeanor when problems spilled over from the housing market'ssub-prime woes earlier this year, lenders are now reportedlychanging terms halfway through for commercial transactions--orwalking away altogether.
When asked whether lenders are using the stubborn "materialadverse change" (MAC) clause to sidestep commitments and rendersafety features like rate locks meaningless, one investor sayssimply, "Absolutely."
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