From Zero Hedge:

Following up on the theme Zero Hedge discussed that the vast majority of commercial real estate backed loans have negative equity, real estate tycoon Sam Zell yesterday, in a presentation to the Milken Institute, said that "you have a scenario today where you have very few '03 to '07 financings that are above water. You have more debt than you have value."

As owners of these properties have more debt than value, sales of properties over the next two to three years will be minimal as none of them would result in a deleveraging. Instead Sam Zell says "investors will buy distressed debt as these properties go into foreclosure."

Sam Zell's observation was in response to the disclosure by David Simon, CEO of SPG, that the REIT had attempted to purchase real estate from bankrupt rival General Growth Properties shortly before it filed for chapter 11...

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