Volume of Distressed Properties Down

Posted on 22 August, 2012 by Jodee Redmond

Commercial real estate investors who were specifically interested in distressed properties will find they are more difficult to access than in the past. According to Real Capital Analytics (RCA), the volume of distressed commercial premises in the United States is waning and is currently at the lowest level since before Lehman.

A total of $375 billion of distressed properties have been identified, but over half (55 per cent) of the distress has been resolved or the property has been sold to a third party. At this time, more properties are moving out of the distressed category than are being added to it, which would indicate that the wave has peaked and is now on its way down.

The cycle of properties going into foreclosure, ending up being taken over by the banks and being sold for a fraction of their original value which played out in the 1990s is no longer the reality. In the current cycle, private equity firms and investors are buying notes to take over distressed properties. According to the RCA’s “Distress Update,” defaults were down in the first quarter of 2012 to $10.8 billion.

Over half (57 per cent) of the distress has been worked out in the office market. Properties worth approximately $44 billion are still in the distressed column, representing the highest total of all property types.

The RCA Distress update goes on to state that workout activity escalated in the second quarter of 2012 to $16.2 billion, which reduced distressed balance by $5.4 billion. This amount represents the second-largest quarterly reduction to distress balances in this cycle.

Only about 10 per cent of sales are for distressed property now, according to RCA. At the height of the distressed property market in 2010, 20-25 per cent of closings were on properties in this category.




Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.


Recent Posts

Interest Rates Impact on Commercial Property

Commercial Property Investment Outlook for 2023

The best places to stay on the Riviera

The latest property data has identified Newquay as the fastest property seller’s market in the UK

Investing in your garden can increase your property’s value

French Riviera temping high-end homebuyers

How can the ownership rights of my commercial property impact a business sale?

Should I incorporate virtual property viewings permanently?

Investment expected to increase across Asia-Pacific in 2021

UK property industry slows as the conclusion of tax break looms

BNP Paribas cautioned investors on Friday as debt-trading bonanza that increased its earnings this past year

Over 300,000 property purchases fell through in 2020 – we show the most frequent motives and the best way to get your house sale back on track

House Prices in the Capital Surpass £500,000

Optimism from the Bank of England’s chief economist

The most expensive commercial properties.

Businesses operating from shared premises will miss out on grants