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Troubled CRE Assets Take Down Another Six Banks – CoStar Group


I read this article, Troubled CRE Assets Take Down Another Six Banks – CoStar Group, from CoStar, feeling a bit like Michael Corlioni from the Godfather.  "Just when you think that you got out of it, they keep dragging you back" or words to that affect.  I haven't heard much about bank failures lately only to hear that 6 more banks were taken down by the FDIC in the past two weeks. Analysts suggest that many of the failures are due to the CMBS and commercial mortgage issues. I guess bank failures are alive and doing well, back in the US.
Earlier in the week, Costar also reported that there has been a significant increase in CMBS defaults in the office sector.   There can be no doubt that my law practice, which currently focuses on post-foreclosure representation of lenders and buyers has seen a significant uptick in office properties as compared to the last 3 years in retail.  I will add that I have also seen a significant increase in new lease work and not just tenant collections.
The good news is that the pace of bank failures has gone down to an average of 5.5 per month over the first 4 months of 1012 as compared to an average of 7.7 in 2011 as reported by CoStar.
The bad news is that some analysts believe that some of the reduction in failures is attributable to giving banks more time to get the financial house in order rather than pulling the plug as fast as they did in 2010.
So what does this say about the state of commercial property and the economy.  Well, what I see is continuing economic pressure in both directions leading me to believe that we are close to the bottom, with slight blips in both directions but no real clue in which direction will be sustained.  Bottom line for me is that I really don't see a sustained major dip but a slow gradual improvement with some slight hiccups along the way.

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