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Wednesday, December 17, 2008

CRE in the News

by Calculated Risk on 12/17/2008 08:53:00 AM

A few stories on Commercial Real Estate ...

From the NY Times: A List a Landlord Doesn’t Want to Be On (hat tip Michael)

[A] New York research company, Real Capital Analytics, has compiled data showing that at least $107 billion worth of income-producing property — including hotels, offices, apartment complexes and warehouses — is already in distress or is headed in that direction.

The distress is occurring all across the country, but New York tops the list ...
And over in the UK, from the Finanical Times: Commercial property fears deepen
With more than £76bn of debt needing to be refinanced before the end of 2010 and increasing numbers of loans slipping into default, the findings of an influential survey of property lending, to be published on Wednesday, will add to warnings that commercial property could be a timebomb for banks that supported the real estate boom.

... the value of loans in breach of financial covenant was about 3.3 per cent of the total loan book by the end of June ... more than treble that reported at the end of 2007.
A decline in cash flow caused by failure of tenants and the subsequent vacant units with no prospect of re-letting was the most commonly cited reason for loans to default. Bankers expect defaults to rise rapidly next year as the recession bites into retailers and office occupiers after early casualties such as Woolworths and MFI.
And from the AP (hat tip Thomas): Fitch: Commercial property loan delinquencies down The AP reports this small decline was due to more loan extensions in November.
As the economy deteriorates, Fitch expects delinquencies to rise with the riskiest loans backed by hotel and retail properties.
Next year will be grim for CRE.