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Only Detroit yields less than Suncoast on commercial foreclosure

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BY SHANNON BEHNKEN

MEDIA GENERAL NEWS SERVICE

Published: October 23, 2009

Rents, occupancy rates and values for commercial projects have plummeted - particularly on the Suncoast - and defaults are on the rise, according to New York-based Real Capital Analytics.

Even taking back the properties is not helping lenders recoup losses.

The Tampa Bay Metropolitan Statistical Area, which includes Pasco County, is among cities with the lowest recovery rates, meaning lenders are getting less money when they sell foreclosed properties and have to eat bigger losses.

The area's recovery rate so far this year has been about 46 percent, according to the report.

Only Detroit fared worse, with a recovery rate of about 45 percent.

The report looked at 145 defaulted commercial mortgages nationwide with an outstanding balance of $3.2 billion that were liquidated this year.
Lenders recovered $1.9 billion - before costs and fees. That's a nationwide recovery rate of 60 percent.

The situation could be even worse than it seems, the report says, because many lenders are holding off on foreclosing knowing the recovery rate will be low.

There are at least $130 billion in commercial mortgages nationwide now in default foreclosure or bankruptcy, according to Real Capital. So far this year, lenders have taken back and sold mortgages totaling $9.5 billion. The majority of troubled loans, however, are in limbo.

Some of those loans have been extended or modified, and only time will tell if they end up back in foreclosure.

Commercial properties bought during the real estate boom were financed 70 percent to 80 percent. Now that property values have dropped, owners have a difficult time refinancing.
Lenders now typically allow only 50 percent to 60 percent of the value to be leveraged.

The Suncoast office sector was set to have $132 million in loans due this year, California-based First American CoreLogic said in late July. An additional $204 million in industrial loans were expected to mature this year.

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