That article is both outdated and IMHO poorly done.

That was in March of 2009 when the REITs and bank stocks were all bottoming, the credit markets were in tatters and things looked worse.

Since then the big REIT stocks have recovered quite a bit, and a good number have taken advantage by raising a good amount of equity capital. That comes without interest payments, and now can be used to stave off having to unload otherwise decent projects for bottom dollar into the market.

In addition a fair number of distressed property REITs have recently successfully raised equity funds which can help put a bottom in on distressed property prices. There are also private firms and others who are quite skilled at buying and converting distressed property who are there to do it.

Whether it is a good thing or not, rental prices in the US have skyrocketed and appear to be a bubble, coming in at an average of $1000 a month recently.

There is a lot of room and real cash flow there to support things like converting big empty condo projects to residential rentals, and maybe converting some office buildings too, which could bring rents down to more rational levels and be a boon to local economies.

While I am not trying to belittle the commercial RE problems, they are large ones, they have been talked about for a year, and all kinds of companies have been adjusting things to deal with their own issue. The common theme seems to be some kind of equity raise, using cash flow, selling some assets and then paying down a bunch of balloon debt coming in, then refinancing the rest.

The terms I have seen on the refinancings are pretty fair, and I have seen some pretty shakey companies able to do it.

They call optimistists childlike in the article, hey, I am laughing. At the time it was written I was buying financial stocks and even a REIT or two, and they have done very well since.

The commercial RE mess is a bad one, lending got too loose in some cases, but I believe it was nothing like the bad lending that fueled the residential RE bubble. The real problem with the commericial RE area is figuring out what to do with the half built or newly built but empty developer projects. They get down to levels that make sense and apartment rentals may be the best short term and sustainable conversion to some. Then three or five years down the road they might convert to condos, going back to what they were built from.

In it all is opportunity for the better REITs.