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Of the nonperforming loans on the balance sheets of the 12 banks that failed in February, 72% were for commercial real estate, according to analytics firm Trepp. There have been 23 bank failures in 2011, but Federal Deposit Insurance Corp. Chairman Sheila Bair said closings this year will not surpass the 157 shuttered in 2010. That was an 18-year high, which Bair said will prove to be the peak coming out of the financial crisis. Analysts at Trepp estimate that there should still be more than 100 failed institutions by the end of 2011, however. Most of the February failures...

After three consecutive months of increases, commercial real estate prices fell 0.9% in December, according to Moody's Investors Service. This up and down activity is leading analysts to say any recovery in the space is hard to pin down. According to the latest commercial property price index from the rating agency, prices at the end of December slumped 42.1% below their peak hit in October 2007. Prices throughout last year also fell 2.1% compared a year earlier.

Thousands of commercial mortgage loans worth north of $200 billion will have to be re-financed or paid in full in the coming months, giving business and commercial property owners and the banks that hold these loans some major anxiety. Listen closely. The faint ticking in the background of the jubilant, media-fueled celebration of America's statistical economic recovery is yet another mortgage time bomb set to explode in our faces and ruin the party. Much has been written and said about the continued problems in residential real estate arena, but the destructive force of defaulting commercial mortgage loans and evaporating equity...

For 2011, 10 of the 11 banks that have closed so far showed bad commercial real estate loans taking the lion's share of the distressed loan book. In six of those cases, losses on bad construction loans made up more than half of the bank's nonperfoming loans. According to Trepp Analytics, CRE loans comprised $600 million, or 82% of the $732 million in nonperforming loans. For the past two years, lenders followed a trend of refinancing the terms of the loan, in a strategy called "extend and pretend."

What will happen to the financial system if US interest rates keep rising? That is a question many investors are pondering, given the recent sharp upward swing in US Treasury yields. There is plenty to fret about: higher rates could hurt US homeowners, for example, as well as delivering more pain for struggling municipalities. However, there is another sector that investors should watch: commercial real estate. During the past three years, the CRE sector has not generally grabbed much attention, because events there have not been as dramatic as in subprime (in 2007-08) or sovereign debt markets (in 2010) But...

U.S. government mulls luring foreign property owners Ilaina Jonas - Analysis NEW YORK Fri Apr 16, 2010 4:36pm EDT NEW YORK (Reuters) - Tax breaks may not be enough of a sweetener to bring foreign buyers back into the flailing U.S. commercial real estate market, where falling rents, rising vacancies, a scarcity of debt financing and lack of property for sale have acted as deterrents. Congress is considering a move to lower or eliminate U.S. taxes currently imposed on foreign investors of U.S. commercial real estate, where the number of sales has fallen off a cliff over the past two...

Silverstein could default on midtown tower By Theresa Agovino Published: March 10, 2010 - 5:37 pm Developer Larry Silverstein, who has been feuding with the Port Authority of New York & New Jersey over building towers at Ground Zero, faces imminent default on one of his existing office buildings: 575 Lexington Ave. The $325 million balance of the loan on the building, which Mr. Silverstein holds along with the California State Teachers Retirement System, was transferred to a special servicer on Wednesday, according to Fitch Rating. Special servicers try to salvage troubled loans for lenders. The partners bought the building...

Barney Frank Asks Top Four Banks To Write Down Second-Lien Mortgages, Claims Have No Economic Value Tyler Durden's picture Submitted by Tyler Durden on 03/08/2010 14:04 -0500 Full Barney Frank letter: Mr. Brian Moynihan Bank of America Mr. Vikram Pandit Citigroup Mr. James Dimon JP Morgan Chase Mr. John Stumpf Wells Fargo Dear Messrs. Moynihan, Pandit, Dimon and Stumpf: The mortgage foreclosure crisis that began over two years ago, and which continues to be a prime contributor to our nation's current economic downturn, burdens millions of hard-working American families. Congress and the Obama Administration have worked hard to address foreclosures...

In this report she talks about CRE loans coming due and how this will affect everyone.

Commercial Real Estate Losses Could Hit $300 Billion: TARP Panel 02/12/2010 By: Carrie Bay Losses from defaults on commercial real estate loans maturing in the next few years could go as high as $300 billion, threatening to topple nearly 3,000 community banks nationwide, a federal watchdog group has concluded. Market analysis by the Congressional Oversight Panel (COP), charged with keeping tabs on the government’s Troubled Asset Relief Program (TARP), shows that $1.4 trillion in loans made over the last decade for retail properties, office space, industrial facilities, hotels, and apartments will reach the end of their terms and require refinancing...

Moneynews S&P: Real Estate Losses Put U.S. Banks at Risk of Downgrades Fri, 29 Jan 2010 02:40 PM Commercial real-estate losses could erode capital at U.S. banks, and ongoing government support may be necessary, especially if the economy worsens, Standard & Poor's says. "We also believe that the combination of elevated credit costs, higher capital requirements, and weak earnings could result in additional bank downgrades in 2010," the rating agency said in a report. Banks' earnings are an important source for replenishing capital worn away by credit losses. However, the mortgage and investment banking revenues that supported earnings during the...

Commercial real estate is expected to remain a drag on the U.S. economy through 2010 and beyond. "You do see stress in the market. We've seen delinquency rates increasing; we've seen by a whole variety of measures increased stress in the commercial real estate market," said Jamie Woodwell, the vice president of commercial real estate research for the Mortgage Bankers Association. Commercial real estate encompasses everything from shopping malls and storefronts to industrial parks and hotels. Delinquencies on bonds backed by pools of commercial real estate loans continue climbing to record levels. At the end of 2009, 4.9 percent of...

Tishman defaults on huge Stuy-Town loan By Theresa Agovino Published: January 8, 2010 - 1:11 pm Friday's announcement by the Tishman Speyer partnership that it was defaulting on the on the mortgage that paved the way for the $5.4 billion acquisition of Stuyvesant Town and Peter Cooper Village was long expected. But sorting out the future of the sprawling Manhattan residential development has only just begun. Tishman Speyer and BlackRock, the lead partners in the venture that owns the complex with roughly 11,000 apartments, said they would not make the full service payment due. However, they said that the failure...

o borrow a biblical expression, it may be easier these days to pass a camel through the eye of a needle than it is to get a commercial real estate loan. Despite federal bail-out money intended to stimulate lending, loans for investment in office buildings, shopping centers, industrial sites and raw land are increasingly rare, the result of falling values and other factors. Commercial property owners and mortgage brokers say the lack of capital also stems, in part, from new federal regulations intended to staunch foreclosures and halt the aggressive lending practices of the early 2000s. "It's ironic that the...

What has been lost in the housing talk recovery is the grim statistics that commercial real estate has fallen 37 percent in value in the last year. This wouldn’t be such a big problem aside from the tiny detail that some $3 trillion in commercial real estate loans are still outstanding. The commercial real estate debacle is already happening with defaults reaching 16 year highs. This is already occurring before many of the commercial real estate loans reach their refinance dates. In some instances banks are simply ignoring non-payment and giving borrowers a few more months or even years. Why?...

CMBS Delinquencies Soar, Led by Hotel Defaults: Trepp 12/04/2009BY: CARRIE BAY The secondary market for commercial real estate is just beginning to show new life, with the first successful sale of a commercial mortgage-backed securities (CMBS) package in over a year and several new issues in the wings spurred by the strong investor interest on that initial offering. But the positives of renewed activity are tempered by more bad news on the performance of those commercial bond deals made before the freeze. According to a new report from commercial research provider Trepp, delinquent loans in commercial mortgage securities jumped 85...

What Dubai Means for U.S. Commercial Real Estate "Delay and Pray" Can't Continue For Long... By Ian Cooper Tuesday, December 1st, 2009 /snip It's only a startling reminder of how fragile U.S. commercial real estate is, especially with certain U.S. properties sitting in Dubai World's portfolio. These include MGM Mirage and the $8.5 billion CityCenter project; the Mandarin Oriental and W hotels in New York; a 50% stake in the Fontainebleau Miami beach resort; and Barneys New York Inc. All Dubai has to do is unload some of its properties... and commercial real estate prices will plunge. It's already seen...

Default Rate for Bank-Held Commercial Mortgages Increases: Real Estate Econometrics 12/01/2009 BY: BRITTANY DUNN n the most recent report by New York-based Real Estate Econometrics (reeconometrics), the property research firm updated its projections, predicting the default rate for bank-held commercial mortgages will rise to 4.0 percent by the end of 2009 and will peak in 2011. Due to higher concentrations in commercial real estate, the largest losses are expected to occur at regional and community banks with $100 million to $1 billion in assets. Up from 2.88 percent during the second quarter, the national default rate for commercial real estate...

Realtors to push for more credit to commercial property Industry group's agenda shifts from home-buyer tax credits to lending issues By Amy Hoak, MarketWatch SAN DIEGO (MarketWatch) -- After successfully lobbying for an extended and expanded home-buyer tax credit, the National Association of Realtors will focus its policy agenda in the months ahead on relief from a credit crunch in commercial real estate, among other issues. "The commercial area is something that is going to be in the news more and more, as loans are rolled over and need to be refinanced," NAR senior vice president and chief lobbyist Jerry...

Commercial real estate is somewhere between an orderly massacre and a disaster, William Mack, founder and chairman of Area Property Partners, a real estate investment fund, told CNBC. “Commercial real estate has over the last several months or few years taken a tremendous setback both in rents and in cap rates,” explained Mack. “I would say depending on the type of product, the value of real estate is down anywhere from 25 to 75 percent.” Formerly known as Apollo Real Estate Advisors, Area Property is an an international real estate fund manager with more than $50 billion invested in real...