- James I. Clark III
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Distressed CRE Hits $108 Billion
More than $108 billion of commercial properties in the United States are now in default, foreclosure or bankruptcy. That preliminary statistic is nearly double the amount reported at the start of 2009, according to New York-based Real Capital Analytics, Inc.
At the end of June, 5,315 buildings were reported to be in financial distress. Hotels and retail properties are the most “problematic” assets after bankruptcy filings by mall owner General Growth Properties, Inc., and Extended Stay America, Inc. The lack of credit is spurring property defaults throughout the country and among every type of investor.
“Perhaps more alarming than the rapid growth in the distress totals is the very modest rate at which troubled situations are being resolved,” according to Real Capital Analytics. The good news is that approximately $4.1 billion of commercial properties have emerged from distress. “In far more situations, modifications and short-term extensions are being granted, but these can hardly be considered resolved, only delayed,” the report notes.