News - Free Yearly Credit Report
Global property faces wave of distress - report
Thu Feb 19, 2009
NEW YORK, Feb 19 (Reuters) - About $10 billion of commercial property worldwide has been foreclosed upon or transferred back to lenders and $72 billion is in trouble, according to a report by real estate research firm Real Capital Analytics.
But the loans coming due this year in the face of a global credit freeze could dwarf the current $82 billion of troubled and foreclosed property, according to the report released on Thursday.
Borrowers face globally constrained credit markets that may make it near impossible to refinance the large mortgages coming due. They also face falling property values in many parts of the developed world.
The credit crisis helped drive down commercial real estate sales in 2008 by 58 percent to $504 billion globally, the report said. Hotel sales declined the sharpest, down 75 percent globally.
While it is difficult to calculate the value of potentially troubled property, about $170 billion of U.S. commercial mortgages are expected to come due this year, $36 billion in Britain and $12.7 billion in Japan.
More than 40 percent of the troubled or foreclosed loans are associated with some phase of property development, in which financing is usually doled out monthly. In many cases, it is the lender that has failed, the report said.
The top 25 distressed properties hail from around the globe, from Bucharest to Beverly Hills.
In the largest individual soured deal, Deutsche Bank (DBKGn.DE: Quote, Profile, Research) foreclosed on the site of developer Bruce Eichner's Cosmopolitan Resort and Casino in Las Vegas, according to Real Capital Analytics.
General Growth Properties Inc GGP.N, the No. 2 U.S. mall operator, which has warned that it could file for bankruptcy protection, leads the way among distressed real estate companies, the report said. (Reporting by Ilaina Jonas; Editing by Tim DobbynSourece: http://uk.reuters.com/article/marketsNewsUS/idUKN1952920620090219
