Almost $165 Billion in Commercial Loans Due in 2009

This isn't even an expensive fix for the fed or us government, they will work something out to fix this minor problem and forget it even happened.





Almost $165 Billion in Commercial Loans Due in ‘09

By Dan Levy

July 27 (Bloomberg) -- Almost $165 billion in U.S. commercial real estate loans will mature this year and need to be sold or refinanced as rents and occupancies fall, according to First American CoreLogic.

The U.S. South has the most maturing loans with 60,893 mortgages valued at $96 billion coming due on shops, offices, hotels, apartment buildings and land, Santa Ana, California- based First American said in a report. The West is second with 20,549 mortgages maturing for a value of $35 billion.

Commercial property owners are struggling to pay debt as the recession reduces demand and forces landlords to cut rent. U.S. apartment vacancies reached a 22-year high in the second quarter and office vacancies rose to the highest in four years, real estate data company Reis Inc. said earlier this month. Properties worth more than $108 billion were in default, foreclosure or bankruptcy as of July 8, according to data firm Real Capital Analytics Inc.

“As long as prices contract, we expect loan performance will worsen and that will make financing difficult,” Sam Khater, senior economist for First American, said in an interview. “Delinquencies and notices of default are rising, and we expect that to continue.”

REIT Debt

Among real estate investment trusts trying to refinance and pay down debt maturing over the next couple years are shopping- mall owner General Growth Properties Inc., which filed for bankruptcy protection this year; Maguire Properties Inc., the largest office landlord in downtown Los Angeles; and ProLogis, the world’s biggest warehouse owner. Denver-based ProLogis said last week that it’s cut its debt by $2.9 billion since November.

REITs will have less trouble with maturing loans held by banks than with debt sold as commercial mortgage-backed securities, said Rich Moore, managing director at RBC Capital Markets in Solon, Ohio.

“If you go to the CMBS market, that’s where the danger comes in, because the CMBS market is a bunch of assets pooled together,” Moore said. “It’s much more difficult to extend those loans -- not impossible, but much more difficult.”

Banks likely will offer extensions to avoid having to manage or sell properties, especially with little buyer demand for commercial real estate during the recession, Moore said. U.S. commercial property prices fell 7.6 percent in May from a month earlier, bringing the total decline to 35 percent since the market’s peak, Moody’s Investors Service said last week. Prices dropped 28.5 percent in May from the year earlier period.

Orlando, Florida

The Orlando, Florida, area led the nation in June with the greatest dollar value due on retail property: $96.9 million. Memphis, Tennessee, followed with $96.2 million and Chicago with $71.3 million, according to First American.

The Houston area led in office loans maturing with $463.9 million, followed by Atlanta at $456 million and Phoenix at $172.3 million. Los Angeles topped the list in apartment loans with $194.3 million due in June, followed by Dallas with $121.4 million and Chicago with $118.3 million.

Portland, Oregon and the surrounding area had $986.9 million in mortgages due on industrial properties in June, the most in the U.S. St. Louis followed with almost $765.3 million and San Francisco came in third with $473 million, First American said.

Stockton, California led in hotel loans due with $14.9 million, followed by Denver with $13.3 million.

The value of hotel properties in default or foreclosure almost doubled to $17.3 billion in the second quarter through June 24 from $9 billion at the end of the first quarter, data compiled by New York-based Real Capital show.

More than 5,000 commercial properties in the 10 biggest U.S. metropolitan areas got at least one default notice in March, marking the first time that’s happened in First American records going back to January 2003.

The company compiles data from sources including county record tax rolls and covers 98 percent of U.S. ZIP codes.

 

165 billion is peanuts. They can print that in a few days.

Green Shoots!!!! Green Shoots!!!! DOW 12,00 by friday's lunch!

LOL.