Editor’s Note: Capmark failing would not be a good sign of a recovery. The mainstream media is finally catching on to the commercial real estate market and its decline. Most analysts are in agreement that we are going to see worst times ahead before we start seeing commercial real estate prices stabilize. A good friend of mine who is in the commercial market, told me that business is off by over 50% compared to last year and he see it getting worse as well.
Bloomberg, New York - Capmark Financial Group Inc.’s possible collapse may signal a new wave of real estate losses for banks — this one tied to business property — that could push the year’s tally of failures past 100.
Capmark, ranked among the largest U.S. commercial real estate lenders by Moody’s Investors Service, posted a $1.6 billion quarterly loss on Sept. 2 and said it might go bankrupt. The Horsham, Pennsylvania-based company struggled as the default rate on commercial mortgages held by U.S. banks more than doubled to the highest since 1994.
“We haven’t really experienced the full extent of the distress,” said Sam Chandan, chief economist at property research firm Real Estate Econometrics LLC in New York. “When you look at community banks and some smaller regional banks, they tend to have a far greater concentration in terms of their exposure to commercial real estate.”
Lenders are still reeling from residential real estate losses that helped push U.S. bank failures to 84 so far this year. The tally included Colonial BancGroup Inc., the sixth- largest failure in the history of the Federal Deposit Insurance Corp. The total may rise later today because the agency customarily announces the week’s shutdowns on Fridays.
Bank failures last topped 100 in 1992, when at least 179 were seized, according to FDIC data. Chairman Sheila Bair has said more collapses are likely, and the agency’s list of “problem banks” stands at 416, the most in 15 years.
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