| IN THE September
16, 2009 ISSUE |
Capmark’s Troubles Highlight Plight of Many CRE
Lenders
With more than $1.6 billion in second-quarter losses and
plans to sell off its most viable business operations, Capmark Financial
Group Inc. provides a painful example of the turmoil plaguing many large
lenders to the commercial real estate industry.
In its second-quarter report published earlier this month, the Horsham,
Pa.-based commercial real estate finance company disclosed an agreement
to sell its mortgage banking origination and servicing businesses to
Berkadia III, a partnership owned by Warren Buffett’s Berkshire
Hathaway Inc., and Leucadia National Corp., for $450 million. Later that
week, rating agencies lowered Capmark’s credit ratings to reflect the
company’s likelihood of defaulting on its cumbersome
debt.
Corus Bank Falls Victim to Economy, Condo
Loans
Corus Bank, a major commercial real estate lender,
disappeared over the weekend after the Chicago-based bank was seized by
federal regulators and its offices reopened as part of MB Financial
Bank, also based in Chicago. The failure indicates a growing role of
soured commercial real estate loans in bank distress.
MB Financial bought $3 billion of Corus assets and regulators are
arranging the sale of another $4 billion in commercial real estate
assets through private placement channels, says LaJuan
Williams-Dickerson, a spokeswoman for the Federal Deposit Insurance
Corp. (FDIC), which was appointed receiver after the closure on
Friday.
Commercial Real Estate Delinquency Rates
Climb
Delinquency rates for commercial real estate loans
continued to rise in the second quarter, the Mortgage Bankers
Association (MBA) says in a new report.
The delinquency rate on loans held in commercial mortgage-backed
securities (CMBS) and at least 30 days past due rose from 1.85% to 3.89%
between the first and second quarters. Meanwhile, the delinquency rate
on loans held or insured by Fannie Mae and at least 60 days past due
rose from 0.34% to 0.51%, MBA notes.
PwC Survey: Defaults Could Jump-Start Stalled Distressed Buying
Opportunities
Despite rapid deterioration of commercial real estate
fundamentals, equity investors have been frustrated with the lack of
distressed buying opportunities. However, according to the third-quarter
PricewaterhouseCoopers' Korpacz Real Estate Investor Survey, investors
anticipate near-term defaults combined with looming due dates on
commercial mortgage-backed securities (CMBS) maturities to jump-start
distressed buying opportunities during the next year.
While some investors are looking to the $153 billion of CMBS loans due
in 2012 to spur buying opportunities, commercial banks account for a
much greater percentage of the total looming debt and could provide
distressed sales sooner than 2012.
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