RCA in the commercial property press:

Credit Squeeze Claims Commercial Developments in Kansas City

Kansas City Star reports: The aftershock of the national financial crisis is rocking the commercial real estate world, leading to a spike in distressed loans and bankruptcies.

While developers and owners of Kansas City shopping centers, office buildings and other commercial properties haven’t been hit as hard as those elsewhere, the credit squeeze has forced some prominent projects into bankruptcy, including the Corbin Park and Lenexa City Center developments in Johnson County and the West Edge project near the Country Club Plaza.

And better days may not be ahead.

A recent report by a Congressional Oversight Panel looking into CRE losses warns that over the next few years, a “wave of commercial real estate loan failures could threaten America’s already weakened financial system.”

The panel estimated that half of the $1.4 trillion in CRE loans that will need to be refinanced nationwide between now and 2014 are underwater — meaning the borrower owes more than the property is currently worth.

In Kansas City, the number of troubled commercial loans jumped substantially over the past year.

Real Capital Analytics, a New York-based research firm, reported last month that there were almost a half billion dollars of troubled assets in Kansas City, a category that includes commercial properties in foreclosure, bankruptcy or other distress.

Hotels are a particularly troubled property type. Out of the $497.4 million in distressed assets in Kansas City reported by Real Capital Analytics, more than half, $259.1 million, are hotels.

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Posted by: Nina Turner

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