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Housing Crisis Hits Its Own
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The financing for the new building has become more costly. The meltdown in the credit markets has made lenders more risk-averse and less eager to loan out their capital, said Paul J. Collins, senior managing director of developer Cassidy & Pinkard Colliers. As a consequence, they are demanding higher interest rates on commercial loans -- by a percentage point or two -- than they did a year ago.
Lenders are also trying to reduce their exposure by asking borrowers to put more money down. Quinn said the association will have to put down about 10 percent more that it had planned.
The lack of tenants has also been an expensive burden. The fact that the association does not have any income-producing lessees has compelled its lender to increase the financing costs slightly, Quinn said.
Quinn said the association is not worried about the pace of leasing. He said it may take until next year to fill the building. But developers said Washington's rental market is weak and that the association will likely take longer than usual to lease the two-thirds of the building that it is not using itself.
"By this time, I would think they would have had another tenant or two," Collins said. "But with the overall negative feeling about the economy out there, leasing has been slower."
Quinn said the association's financial condition remains strong, and the purchase of the new building will benefit the mortgage bankers for a long time. "It was an important employee morale issue" to acquire new space, he said.
To make ends meet in the meantime, the association is doing what any strapped mortgage holder would do.
"We're looking at [cutting] expenses across the board," said Cheryl Crispen, the association's senior vice president for communications. Among the options: hosting fewer in-person seminars and eliminating Teleprompters at the annual meeting.
