By Terry Kramer, 4/6/2010

Until the Banks re-establish their financial footing, Developers are being left in the cold with sunk costs into projects that are not being completed.  Investments have been made in land, infrastructure, design fees, and partially built projects with no prospects of near-term completion.

Many Developers are simply tapped out when it comes to cash flow because they did not expect their projects to be sidelined for 2-3years or more, and had projected that their own invested funds would have yielded a healthy return by now.

Developers will need to grow accustomed to dealing with other funding sources besides their friendly neighborhood Bankers. In many ways, an artificial system was created by Bankers to serve Developers that required minimal information and lots of regulatory over-rides.  That is not quite how it was supposed to work.  As a result, Developers were placed on powerful pedestals as those friendly Bankers smiled and raked in volume bonuses from financing fees.

At least for the foreseeable future, Banks will need to hoard cash reserves in anticipation of serious stresses that will be placed upon them from already built commercial developments. Banks have tripled and quadrupled their cash reserves to prepare for these commercial loan failures, which has prevented them from loaning funds for new commercial developments.  No  matter how spectacular the new developments are with related cash flow projections, proformas, market demand, design appeal, existing sunk investment, or location are, the Banks are saying no.......read more