After 13 months of consecutive falls, the commercial property values increased, in general, 1%, according to the latest monthly index REAL Commercial Property Price, the rating agency Moody’s.
Even reputable bankers optimistic scenarios offered in the state of the market.
“The commercial real estate are the remains of a terrible disaster, but it is over,” said Chief Executive of JP Morgan Chase, Jamie Dimon during a conference sponsored by the company last month. But some industry experts have warned that the problem is still not finished.
The high-profile acquisitions that were made at the peak of the bubble in real estate have started a collapse in all directions. Last month, the owners of Stuyvesant Town and Peter Cooper apartment complexes in New York, failed to meet payments.
Above all, the lenders who helped finance the Four Seasons Resort and Club out of Dallas are close to foreclosure on his property of 400 acres.
With the unemployment rate nationally is still about 10%, and consumer spending levels still difficult, there is no doubt why the borrowers whose businesses are in shops and buildings so much pressure.
“Companies are not occupying space in offices and consumers are not buying things in stores,” said Mark Reedy, executive director of the Burnham-Moors Center for Real Estate, University of San Diego.
That is a fatal prospect for thousands of regional and community banks nationwide have little 860.000 billion in commercial mortgages and loans for construction and development.
Synovus Financial, Georgia, Zions Bancorp, Utah and Buffalo, and M & T Bank, New York, are just some of the financial institutions whose credit portfolios are heavily concentrated in commercial real estate, according to U.S. credit rating Standard & Poor’s.
Trying to measure the extent of these problems has been difficult. Funding agencies have been slow to recognize the losses in several of their claims.
That is because many of these entities have not seen the need for foreclosure clients who are current in their payments, even when they are completely stuck with your loan, or owe more than it really is worth its property as experts said.
Driven by industrial regulators, banks have extended the terms of several of its commercial loans, hoping that the values of ownership or occupancy levels improve quickly.
“There is the element of ‘expanding and claim,’” said Tanya Azarchs, credit analyst and managing director of Standard & Poor’s. “It depends on banks if they do or not.”
Unfortunately, we know that neither the prices nor occupancy rates will improve soon.
The figures published last November by the Urban Land Institute and PricewaterhouseCoopers suggests that vacancies in commercial real estate will increase in 2010, while his value will go down in the course of the year. Prices will fall to half of its highest points in 2007.
If that happens, just nublaria hopes that borrowers refinance bank loans. It expects about $ 1.4 billion real estate debt maturing over the next three years.
Matt Anderson, a partner at Foresight Analytics, said that can only mean one thing for the banks: more losses.
“When you combine that with the fall of the value [of property], there is a serious problem.”
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Tags: Commercial, commercial real estate, Development, Mortgage, Property, Real estate
