Another fine mess: Next crisis could involve CRE loans
The Union Tribune (San Diego) reports: For the past two years, home foreclosures grabbed most of the headlines regarding the real estate bust. This year, it's likely to be commercial real estate's turn.
A new study by research firm Real Capital Analytics of New York identified 18 properties valued at $240 million it classified as “distressed” in San Diego County. They included five apartment buildings, six offices, one retail center and one industrial building.
Real Capital Analytics found an additional 68 properties worth $1.5 billion that are “potentially troubled” in the county – mostly because they have loans coming due and may face difficulty refinancing.
Potentially troubled buildings locally include 18 apartment buildings, 14 retail properties, seven offices and seven hotels.
“Our last down-cycle in the early 1990s was really signified by property-level distress,” said Dan Fasulo, managing director of Real Capital Analytics. “The property was empty. You could see through the building. We had massive overbuilding. It didn't matter what the asking rent was. There wasn't a tenant.”
“We have some of that this cycle,” he said. “But with a majority of these troubled assets, the problem exists with the ownership, not necessarily the property. Most of the issue is that ownership paid too much and used a lot of aggressive CMBS debt.”
View the full article on The Union Tribune (San Diego): Another fine mess: Next crisis could involve CRE loans
Posted by: Nina Turner