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Study: Troubled Assets Have Doubled in '09

07/13/2009 | By Allen Kenney

Study: Troubled Assets Have Doubled in '09
The value of commercial real estate properties in default, foreclosure or bankruptcy has more than doubled already this year, according to a report from research firm Real Capital Analytics (RCA).
Through the end of June, the estimated level of troubled commercial assets had reached nearly $110 billion, RCA said. That figured includes a projection of more than $10 billion in newly defaulted mortgages in the month of June.
RCA noted that the pace of mortgages falling into default this year far exceeded that of distressed situations being resolved. While more than $60 billion in distressed assets had reached default status, resolutions had been achieved for just $4.1 billion worth of properties.
RCA also pointed out that distressed situations had become almost ubiquitous across different locales, sectors and borrowers.
"Distress is not only widespread geographically and by property type, but also by borrower type. Excess leverage is endemic to every type of investor, all of which are facing difficulties refinancing mortgages as they come due," RCA said.
The retail and hotel sectors have experienced the most trouble so far this year, with distressed assets reaching $17.8 billion and $11.8 billion, respectively.