RCA in the commercial property press:

More than $50Bln of Properties Became Distressed Since Start of Year

Commercial Real Estate Direct reports: Slightly more than $50 billion worth of commercial properties have become distressed since the start of the year, according to Real Capital Analytics.

The dollar volume of properties classified as distressed by the New York research company increased by 136 percent to $88.2 billion, while the number of distressed properties rose 131 percent to 4,566. Some 1,649 assets valued at a combined $23.5 billion were added to the distressed rolls just since mid-February.

The increases were driven primarily by the bankruptcy of General Growth Properties Inc. and troubles in casino-hotel properties in Las Vegas and Atlantic City, N.J.

Real Capital's definition of distressed encompasses properties that are in default of their mortgages, including ones taken over by lenders, owned by a troubled or bankrupt entity or have a major tenant in bankruptcy. It also includes properties whose debt has been restructured and those taken over by the holders of junior debt.

Bankruptcy is a common theme among the assets that have fallen into the troubled category this year. In addition to the bankruptcy filings by owners, filings by tenants, both major and non-major, have resulted in lost rental income and hurt some properties' ability to service debt.

And, the bankrupt Lehman Brothers Holdings is or was an investor in 34 assets with a combined value of $2.7 billion that became listed as troubled this year. Some of that trouble surfaced amid allegations that Lehman failed to provide committed financing.

"There's definitely a lot more trouble in the market and a lot more bankruptcies now," said Jessica Ruderman, senior research analyst at Real Capital. She noted that the increase in tabulated volume may be partly due to the fact that Real Capital just started tracking troubled assets late last year and has since refined its research methodology, which would make recent reports more comprehensive.