A Peek At The Troubled Assets Radar
Washington Business Journal reports: The other day, we received what is regularly one of the most fascinating reads to real estate reporters, Real Capital Analytics’ Troubled Assets Radar report.
This national report, released July 8, puts the total inventory of “distressed assets” (defined as property in default, foreclosure or bankruptcy) at $108 billion at the end of June. The report graphically depicts a steep upward climb in the number of properties falling into distress each month. On the flip side, it shows a very modest rate at which problems are actually being resolved.
According to the report, the District has seven distressed properties representing $276 million in debt.
Northern Virginia has 26 such properties with $388 million in troubled debt.
Suburban Maryland towers over both of those jurisdictions, with 33 troubled properties carrying almost $562 million in debt.
Normally, Real Capital Analytics prepares separate regional reports for major metropolitan areas. Finding no such report for Washington, we asked RCA’s managing director, Dan Fasulo, why no love for us.
“That’s a good thing — means we were not able to aggregate enough troubled assets in the market,” Fasulo said.
But, but but ... we have 51 empty office buildings in Northern Virginia alone...
Local banks are seeing something like an average 7.6 percent nonaccrual rate (basically, that’s the default rate) on construction and land development loans — compared to something in the 5 percent range nationally. Eleven local banks have nonaccrual rates in the double-digits.
The Watergate is in default, the Dumont is in foreclosure, Monument Realty is in trouble all over town, empty buildings abound by the ballpark, Opus East is in Chapter 7 liquidation ...
“Are we overreacting to signs of trouble here?” we ask Fasulo.
“Just because a building is empty, doesn’t mean its troubled — we have a pretty strict methodology, and we need hard evidence that a building has fallen into the foreclosure process,” Fasulo said.
Wait, don’t exhale yet: “Many of these properties are heading down that path and I believe that, next month, we may have enough to run a full report on D.C.,” Fasulo said.
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Posted by: Nina Turner