RCA in the commercial property press:

Distressed CMBS Loans Up

Housing Wire reports: The amount of distressed real estate backing commercial mortgage-backed securities (CMBS) spiked 41% in April, adding $12.8bn of troubled loans to the more than $184bn total, according to a report from global commercial property research firm Real Capital Analytics.

The April increase is the highest in 2010, and the rate is increasing. The amount of new, distressed commercial loans being measured by the firm for May is already approaching $10bn. Office and hotel sectors drove the increase in April, particularly the Morgan Stanley default on its $2bn Revel casino and hotel development in Atlantic City.

The April numbers also reflect the “emerging effects” of changes put in place by the IRS in September 2009, which allowed special servicers more flexibility when restructuring loans in imminent default.

“Since borrowers and special servicers can restructure assets that are not yet troubled, more borrowers have been moving to secure modifications before losing control of an asset,” according to the report. “The restructuring pipeline is almost certain to increase across almost all property types going forward.”

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 Facing Widespread Foreclosures, Banks Allowing Some Debtors a Free Pass

Posted by: Nina Turner

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