RCA in the commercial property press:

Fearing a Commercial Real Estate Crisis in NJ

NJBiz reports: Distress among commercial real estate mortgages in New Jersey is intensifying, with more properties in the state going back to the lenders. Some industry insiders say a crisis may be in the works if the economy continues to falter.

"You’re certainly seeing an increasing rate of foreclosures, and of lenders taking back properties," said David Bernhaut, executive vice president at the East Rutherford office of Cushman & Wakefield, a commercial real estate brokerage. "It’s distress that everybody feels and senses."

New Jersey currently has nearly $3.6 billion of distressed commercial assets, according to Real Capital Analytics, a New York-based research and consulting firm. Distressed assets include those in foreclosure or bankruptcy, have been restructured or modified, or have been taken back by the lender through foreclosure.

Lenders are currently lending at a 50 percent to 65 percent loan-to-value ratio, compared to 70 percent or 75 percent five years ago, said Kenneth Pasternak, chairman of KABR Real Estate Investment Partners LLC, a Paramus-based opportunistic real estate investment fund. Meanwhile, real estate is being appraised at values that are off by 25 percent of what they were five years ago, he said.

Real estate investment activity in New Jersey peaked from 2005 to 2006, and with most commercial real estate loans having five-year terms, the majority of those mortgages are due to mature between 2010 and 2012, he said.

Articles related to this topic:

 Commercial real estate crisis threatens recovery
 Record NYC real estate deal now on the rocks
 Why This Real Estate Bust Is Different
 New Distressed Manhattan Property Tally Tops $12 Billion

Posted by: Matthew Stone

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