Editor’s Note: $8 billion is a drop in the bucket compared to the couple trillion in commercial loans that have been written in the last few years. The story for 2009 & 2010 will be the continue decline in the commercial real estate market. In my home market of Seattle, I have seen many commercial properties become vacant in the past year and I don’t see that trend stopping anytime soon. Most businesses are looking to reduce their operating costs and reducing the amount of space they lease is a good way to cut costs.
News (Reuters):
Falling U.S. commercial property values have resulted in appraisal reductions on more than $8 billion in office, retail and apartment building loans in May, more than double that of December, according to Trepp, a firm that tracks commercial mortgage-backed securities.
The average appraisal reduction is 36 percent of the loan balance, it said.
Reductions in appraised values on buildings have resulted in shortfalls of interest payments to investors, including some on bonds protected from the first loss, it said.
Source: Reuters
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