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Strategist has faith inbusiness properties

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By MICHAEL SASSO

msasso@tampatrib.com

Published: October 28, 2009

TAMPA - Despite fears of a looming crisis, at least one observer of the economy thinks talk of a collapse in commercial real estate may be unfounded.

Tuesday morning, John Augustine, the chief investment strategist for Fifth Third Private Bank, revealed his relatively bullish outlook for the economy and stock market for 2010. He spoke to a small group of Fifth Third bankers and guests at the Tampa Club in downtown Tampa.

In the near future, $400 billion to $600 billion of commercial real estate loans are set to mature, Augustine said. With so many banks reluctant to refinance loans lately, many are predicting commercial landowners will default en masse when they can't get new financing.

Augustine, who is based in Cincinnati, said that's not a certainty, though. For now, the stock market seems to believe in the future of commercial real estate, he said.

For example, the Standard & Poor's BMI REIT index, which tracks the performance of stocks of real estate investment trusts - publicly-traded firms that hold real estate - is up 4.7 percent over the past year, he said.

Big REITs such as mall owner Simon Property Group have raised cash by issuing stock and debt and now sit on "war chests" they can use to buy property, Augustine said.

To be sure, most of the commercial property in Florida is held by small private companies and investors, not big real estate investment trusts. However, Augustine said he believes banks today have returned to profitability and, moving ahead, will be more willing to refinance commercial mortgages. That should prevent a commercial collapse, he predicts.

Reporter Michael Sasso can be reached at (813) 259-7865.

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