In the wake of extraordinary steps taken by the federal government to pick the U.S. economy off the mat — including the $700 billion TARP program to bail out the nation's banks and the $787 billion stimulus package — it would be reasonable to assume those efforts are helping unclog the credit markets for commercial real estate. And perhaps even win the admiration of borrowers in the process.

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But it turns out that would be an incorrect assumption, based on NREI's newly released survey of borrowers and lenders. Nearly one in four borrowers (24%) state that financing will be more difficult to secure as a result of recent actions taken by the U.S. and foreign governments to stabilize the financial markets. Another 17% say the recent government actions will have no impact.

What about the lenders? Well, 13% of respondents say that financing will actually be less available in the future as a result of the government efforts to stabilize the financial markets. Another 16% say the efforts will have no impact.

Critics have a point

“There is truth behind what the pundits are saying that the stimulus package and the recovery package have not been what is needed to start the economy moving,” says Robert Habeeb, president and COO of First Hospitality Group in Rosemont, Ill., a hotel developer and manager that operates 40 hotels in the Midwest. “Your respondents, the borrowers and lenders, are people in the best position to know.”

Some of the government lending programs are having an impact, but not on a large scale. The Term Asset-Backed Securities Loan Facility benefits owners with a large portfolio of assets, but it is not creating liquidity for the small- and middle-market loans. In the first commercial mortgage deal sold under the federal government's TALF program, Developers Diversified Realty completed a $400 million bond offering in November.

In hotel circles, a disconnect exists between what lenders are saying and what they're actually doing, says Habeeb. “What lenders are verbalizing when you talk with them is, ‘OK, we're getting back into the game, and we've set some aggressive lending goals for the year. We're still definitely in the hotel sector.’ But you don't see any action behind that.”

Still, Habeeb is confident that the second half of 2010 will prove more fruitful as the fire sale of assets inevitably occurs. In light of the dearth of development activity, First Hospitality Group this year plans to take on about a half dozen third-party management assignments as loan workouts become even more widespread.

“We have a few very good ground-up development projects that got stalled, and as soon as the market starts to clear we'll probably move on them. These are slam-dunk projects,” says Habeeb, whose company operates a mix of extended-stay, focused-service, full-service and resort hotels. The company also is looking to acquire and reposition hotel properties in select Midwestern markets.

Every dark cloud has a silver lining, and the current lending crisis is no exception, emphasizes Habeeb. “When borrowers are frightened, they do smart deals.”

Contact Editor Matt Valley at matt.valley@penton.com.