Commercial Delinquencies RISE: Carpe Diem Short Sale Investors

If you have one of those magic watering-hole sticks it should be pointing and shaking at commercial real estate short sale opportunites.  If not, throw it away…it just ain’t workin’.  The latest numbers for CRE mortgage delinquencies are on the rise.  According to data from the Trepp report, 30+ days delinquent commercial loans more than doubled with a rise of 89 basis points to 7.61% last month.  That is the highest monthly increase since the summer of last year.

What’s going on?  Still low consumer confidence, increased consumer saving versus spending, and unemployment are keeping the commercial market stifled.  In addition 09’ had low commercial sales and low commercial loan origination while perceived value of commercial property took a 29% dip.

Vacancy rates for commercial property have increased.  Office space leads the pack at 19.7%.  Following closely behind is retail space at 19.2% vacancy, 13.2% for industrial space, and 8.6% for multifamily properties.

Competition for tenants has pushed rents down.  Looking at this last quarter versus the same quarter last year, there has been a 6% decline in apartment rents and 9% discount on rent for industrial space.

I read in more than one article that Elizabeth Warren, chairperson of the Congressional Oversight Panel, predicts that over half of ALL commercial over real estate loans will be underwater by the end of 2010.

Over-leveraged and delinquent commercial property owners with no re-finance options will leave bank destruction in their wake.  According to the same Trepp report, most bank failures will be seen in Florida, Georgia, California, Illinois, Minnesota, and Michigan.  They predict that over 200 banks will fail in 2010 with total assets well over 0bn.  Whoa, that’s a 30% increase!  There were only 140 that crumbled last year.  Last’s year’s increase over the 25 that failed in 08’ brought enough strife.

The property types with the highest 30+ day delinquency rates are multifamily at 13.19% of all delinquencies in March and lodging at 16.89%.  In the calendar year industrial increased 76% over the same time last year, lodging increased 88%, retail increased 66%, office increased 74%, and multifamily increased 71%.  The percentage of 60+ days delinquent loans rose from February to March by 69 basis points to 6.66%.

On a positive note there was a slight increase in the total number of loans originated and the value of commercial property from the beginning of 09’ to the end of the year.  Just keep in mind the whole picture.

There has not been a better time than now to invest in commercial real estate.  The “buy low sell high” mantra of every investment 101 class comes to life.  You can purchase a commercial property below market at little to no out-of-pocket commitment.  With the right financing you can immediately net monthly cash-flow.  The key is mentorship, educated deal analysis, and patience.

Be watching the Daily Headline for invitations to exclusive Commercial Short Sale TIPS and techniques webinars.  We will be bringing you industry experts to take you through the ropes.

To Your Short Sale Success!

*All articles posted on Short Sale Daily News are opinions.  Information contained in the articles should be verified by readers and not taken as fact until research confirms the opinions shared. Thank you for reading.

Related posts:

1. Commercial Short Sales: Seize the Moment
2. Short Sale Marketing: Targeting Data from Freddie Mac
3. 90 Day Delinquencies at the Highest Share In History