St Louis Commercial Financing News: Commercial Real Estate Remains Soft
News Press Hot Line: 314-334-0210 | Floyd Tapia

According to the National Association of Realtors (NAR), commercial real estate sectors, hurt by weak job growth, are offering incentives in many areas that are conducive to business expansion.

Lawrence Yun, NAR chief economist, said fallout from the recession continues to impact commercial real estate.

“Vacancy rates are beginning to level off in some sectors, but rent discounts and moderate levels of landlord concessions are widespread,” he said.  “This is very much a tenant’s market, which is quite favorable for businesses that are considering expansion.  It’s also encouraging that there is a modest improvement in the sentiment of commercial real estate practitioners.”

The Society of Industrial and Office Realtors, in its SIOR Commercial Real Estate Index, an attitudinal survey of more than 600 local market experts,1 shows vacancy rates are beginning to level, but rents remain depressed, and subleasing space is high.

Fifty-seven percent of respondents expect improvements in the office and industrial sectors in the third quarter.

St Louis commercial real estate development remains stagnant in all regions with low investment activity.

What is interesting is that 88 percent of respondents said it is virtually nonexistent in their markets, but development acquisitions are beginning to grow in many areas in what is described as a buyer’s market.

Vacancy rates in the office sector, with high levels of available sublease space, are expected to increase from 16.7 percent in the second quarter of this year to 17.0 percent in the second quarter of 2011, and then ease later next year.

Industrial vacancy rates are likely to decline from 14.1 percent in the second quarter of 2010 to 13.7 percent in the second quarter of 2011, and then continue to ease modestly as the year progresses.

Retail vacancy rates should hold steady at 13.1 percent in both the second quarter of this year and in the second quarter of 2011, with a level pattern for most of next year.

The apartment rental market especially multifamily housing is benefiting from modestly higher demand.  Multifamily vacancy rates are likely to decline from 6.0 percent in the second quarter of this year to 5.6 percent in the second quarter of 2011.

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When applying for any type of St Louis mortgage, call Liberty Lending Consultants, the recognized St Louis home loan and refinancing experts, at 877-334-0210 and ask for Steve Swan or Doug Stahlschmidt.

For business owners looking for small business loans and alternative financing that works, call Floyd Tapia, host of the St. Louis “Mortgage Minute” at 314-334-0210. He is a successful hedge fund originator assisting local and national business owners in getting private and public St Louis finance and commercial lending with no upfront fees.

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St Louis Commercial Finance News: The First Quarter Of 2010 Showing Stability In The Commercial/Multifamily Real Estate Sectors [News Hot Line: 314-334-0210 | Floyd Tapia]

Early in July, the Mortgage Bankers Association (MBA) released its Commercial Real Estate/Multifamily Finance Quarterly Data Book for the first three months of 2010.

The optimistic financial analysis depicts commercial real estate fundamentals are finally starting to show signs of stabilization although in general, property and mortgage performances were weak and unchangeable.

St Louis lending experts are readily agreeing that as the economic growth hopefully continues, this impact on commercial real estate markets should broaden and ultimately reach rents, vacancies and delinquencies.

Their Data Book compiles the most recent housing information on various topics of real estate ranging from commercial to multifamily real estate.

They also include known finance industry participants and of course, observers who carefully watch the trends in property sales, originations, delinquencies and any outstanding mortgage debt.

There was no mention or comments about the potential problems that still face the commercial lending arena largely due to property values dropping and large amounts of business loans coming due needing refinancing or some type of modification.

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When applying for any type of St Louis mortgage, call Liberty Lending Consultants, the recognized St Louis home loan and refinancing experts, at 877-334-0210 and ask for Steve Swan or Doug Stahlschmidt.

For business owners looking for small business loans and alternative financing that works, call Floyd Tapia, host of the St. Louis “Mortgage Minute” at 314-334-0210. He is a successful hedge fund originator assisting local and national business owners in getting private and public St Louis finance and commercial lending with no upfront fees.

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Check back daily for more financial news.

St Louis Mortgage Refinancing and Real Estate News –

St Louis Finance News: Commercial Office Vacancies Continue To Rise
News Hotline:  877-334-0210 | Floyd Tapia

Commercial office vacancy rates are currently at their highest levels in 16 years according to a report by Reis real estate research firm with the St. Louis lending community seeing this first hand.

And the rising of unemployment rates across the country continue to decrease the demand for this retail space.

There is approximately 4 billion square feet of total office space available nationwide.

However, 700 million square feet, or about 17.2 percent is unoccupied as of March 2010.  The last time office vacancies were this high was in 1994.

The number of empty offices has soared since the beginning of 2008, as unemployment and the ever growing amount of business failures have devastated commercial real estate.

This epidemic has hit the commercial sector hard on a national level.  Almost three-quarters of the country’s major metropolitan areas has experienced an increase in office vacancies since the start of this year.

And to date, the city with the highest office vacancy rate is Detroit.  The sad news is that this city has also been the victim of some of the highest amounts of foreclosures in the housing industry.

The financial downfall of the automotive industry has also played a pivotal role in the economic downturn of this area so much so that over a quarter of all office space in the metropolitan region now sits empty.

But the commercial market has been quite different on the eastern coast with Washington, D.C. boasting the lowest vacancy rate with only 10.4 percent of all office space vacant as of the end of March.

Overall, office rent continued to decline falling to 0.8 percent in the first quarter.

California’s Orange County and New York City saw the biggest decline in rents so far this year falling a considerable 2.3 percent and 2.1 percent.

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When applying for a St Louis mortgage or to discuss your St Louis lending options, call the recognized St Louis home loan experts, at 877-334-0210 or 314-334-0210 and ask for Steve Swan, Doug Stahlschmidt or syndicated columnist Floyd Tapia, the host of the St. Louis Refinancing “Mortgage Minute.”

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St Louis Mortgage Refinancing and Real Estate News –

Commercial News: Housing Experts Say CMBS Delinquencies Increasing to 6 Percent

The latest housing news has been geared toward the imminent rise of commercial mortgage foreclosures that have been predicted to his this country hard in 2010 and 2011.

Just recently, data has been reported that the delinquent unpaid balance for commercial mortgage backed securities (CMBS) has increased to $47.82 billion in February 2010, soaring $1.87 billion from January, according to the latest Monthly CMBS Delinquency Report released by investment rating agency Realpoint, LLC.

Comparative statistics show that the overall delinquent unpaid balance was up almost 300% from February 2009, when only $11.98 billion of delinquent unpaid balance was reported.

But that wasn’t the biggest increase with CMBS delinquencies.   Looking back close to three years ago, today’s delinquencies was more than 21 times the low point of $2.21 billion in March 2007.

However, the bad news may be worse.  The distressed 90-plus day, foreclosure, and REO categories grew in quick proportions for the 26th straight month which was 9 percent from January 2010 and a shocking 420 percent higher than the same month in 2009.

Overall, the total unpaid balance for CMBS pools reviewed by Realpoint for the February 2010 remittance was $797.06 billion, down slightly from $797.3 billion in January.

Thus, the resultant delinquency ratio for February jumped to 6 percent, up from 5.76 percent reported one month previous. This was more than four times the 1.43 percent reported just one year ago and again more than 21 times the Realpoint-recorded low point of 0.283 percent from June 2007.

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When applying for a St Louis mortgage loan or a St Louis refinancing Liberty Lending Consultants loan, call the recognized St Louis home loan experts, at 877-334-0210 or 314-334-0210 and ask for Steve Swan, Doug Stahlschmidt or syndicated columnist Floyd Tapia, the host of the St. Louis Refinancing “Mortgage Minute.”

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News: 4th Quarter Losses Total $6.5 Billion for Freddie Mac

While financial losses in the billions would bankrupt even the most affluent of companies, the government-owned mortgage financing firm Freddie Mac has managed to stay afloat in short due to cash infusions costing taxpayers additional billions.

The near record loss of $6.5 billion in the fourth quarter of 2009 was up from $5.4 billion in the very same quarter just a year ago.

Although this would be considered quite an improvement from 2008 losses of $50.1 billion, $21.6 billion lost for the 2009 year is still quite a fiscal snafu for this unpredictable economy.

However, it is interesting to note that Freddie said it ended the quarter with a positive net worth of $4.4 billion.

If those numbers are correct, this means that for the third straight quarter it did not need another injection of government cash.

Of course, the net worth financially compares a company’s assets to the value of its liabilities as Business 101 would say.

But it was only twelve months ago that Freddie was desperately in need of $30.8 billion in government bailouts as mounting foreclosures on the mortgages they owned or guaranteed devastated their finances.

Since the start of this conservatorship, this financing behemoth has received $50.7 billion in taxpayer dollars, while its sibling, Fannie Mae, has received $60.9 billion.

From a portfolio point of view, Fannie Mae and Freddie Mac own or guarantee approximately 31 million home loans with a net worth of about $5.5 trillion.  That’s equivalent to 50 percent of all mortgages currently on the books.

St. Louis mortgage analysts are not yet convinced that more federal money won’t be needed by these two floundering companies.

With foreclosures at an all time high and with the unstoppable new tidal wave of commercial real estate foreclosures coming in 2010, these failing institutions have no choice but to take most of the responsibility for all this havoc.

They, along with lenders nationwide,  irresponsibly succumbed to greed causing them to loosen their lending standards for borrowers during the real estate boom.

At present, close to 4 percent of Freddie Mac’s borrowers have missed at least three mortgage payments with Freddie reeling from the consequences.

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News: Commercial Real Estate Crisis Fuels the Home Mortgage Debacle

In a report issued by the Congressional Oversight Panel, Washington seems to be anything but optimistic concerning any resurgence for our sluggish economy.

With the possibility of  astronomical losses in the commercial real estate sector, this new fiscal collapse could endanger the U.S. banking system and thwart any chance of an immediate economic recovery.

Approximately $1.4 trillion in commercial real estate loans will require refinancing over the next three to four years.

The ongoing problem that has crossed over from the residential real estate fallout is that half of those commercial loans are underwater, written for properties whose value has plummeted.

According to this report, the estimated losses could set our economy back between $200 billion to $300 billion and financially threaten about 3,000 small to mid-size banks with a disproportionate share of commercial real estate assets on their ledgers.

This is being called the next ‘wake up call’ alerting the Obama administration and politicians that the commercial real estate lending market is going to get far worse before any recovery starts to take place.

Elizabeth Warren, the panel’s chairwoman stated:  “We’re at a point where even as TARP is ramping down another major challenge in our economy is ramping up.”

She continues:  “We need to start now, before the system is on the brink of collapse to figure out a plan.”

St. Louis home loan analysts are concerned with the panel’s research which found that 2,988 banks are heavily invested in commercial real estate loans.

The financial debt of these banks claim to tie up more than three times the amount of their assets.  And of that number, about 2,500 have less than $1 billion in assets per bank.

Many ask:  “Are there any solutions to prevent such a massive default?

Some possible solutions brought forward by the panel who did this study includes a ‘financial stress’ tests for banks, throwing more capital into these small banks, buying their near worthless assets or even going as far as guaranteeing these loans.

Theoretically, there should be assets available without further burdening of tax payers since the Fed announced earlier this year that they have no intentions of buying secured mortgages as of March 31, 2010.

The St. Louis Refinancing Group mortgage news team will keep you posted.

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News: Commercial Mortgages May Become A Ticking Time Bomb

Lenders who have dealt heavily in retail properties and office buildings will undoubtedly be confronting financial woes as expensive commercial real estate purchases made at the height of the real estate bubble looks to be imploding on a massive scale.

This doesn’t take into account that the nation’s unemployment rate is still hovering at 10% and consumer spending is at an all-time low which only makes matters worse.

“Businesses just aren’t taking office space and consumers aren’t buying things at retail stores,” said Mark Riedy, the executive director for the Burnham-Moores Center for Real Estate at the University of San Diego.

This is not good news for the community and banks nationwide since they hold an approaching $900 billion in commercial mortgages and construction and development loans.

Information provided by the credit rating agency Standard & Poor’s recently disclosed that some of the banks whose financial lending portfolio are highly concentrated in commercial mortgage instruments are Georgia’s Synovus Financial, Zions Bancorp of Utah and Buffalo, N.Y.-based M&T Bank.

But here’s where the problem becomes more complex.  Since many of these lenders have not felt the necessity in starting the foreclosure process on their commercial clients, it has been difficult for them to actually gauge the real scope of these problems.

The surprising reason for this hold up seems to lie with the  fact that most of these borrowers are still current on their mortgage payments even though they are upside down on their loan.

But this step seems to be unavoidable as it comes at the encouragement of industry regulators who have requested that banks extend the terms of their commercial real estate loans, hoping that soon property values as well as occupancy levels will start to improve.

“There is an element of ‘extend and pretend’ going on,” said Tanya Azarchs, credit analyst and managing director for Standard & Poor’s.  She goes on to say that:  “It is in their [banks'] interest to do that.”

But this is where the optimistic views end.  The majority of mortgage and banking analysts feel that both prices and occupancy rates will not improve any time in the near future.

So, we’re left with predictions that prices could fall as low as half their peak levels of 2007 with continued values plummeting throughout the year.  What of the large amount of vacancies?

The double backlash will probably continue.  Estimates published last November by the Urban Land Institute and PricewaterhouseCoopers suggest that commercial real estate vacancies will continue to increase in 2010.

The obvious question that millions are hesitating to ask is:  Will this next tidal wave of financial losses knock our already teetering economy down for the account?

News:  Commercial Real Estate Defaults Double as Values Continue to Fall

Disheartening news continues to be coming true for the already teetering housing industry.  Real Estate Econometrics LLC says commercial mortgage default rate on loans held by U.S. banks more than doubled to 3.4% in the third quarter as vacancies rose and rents declined.

Defaults climbed from 1.37% a year earlier and from 2.88% in the second quarter, the New York-based property research firm said today in a report.   Default rates in the first three quarters of 2009 have been the highest since 1993, the firm said.

“Mortgages originated in 2006 and 2007 are experiencing the most significant shortfalls in current cash flow relative to current debt-service obligations,” Sam Chandan, chief economist of the firm, said in the report.

Federal Reserve Chairman Ben S. Bernanke said in a Nov. 16 speech that “the fallout” for banks from commercial real estate could slow the nation’s economic recovery.

Defaults on bank-owned commercial property mortgages posted the biggest quarterly jump from the previous quarter in six years of FDIC data analyzed by Real Estate Eco nometrics.

The St. Louis Refinancing Group news team learned that values of commercial real estate will continue to fall before a slight rebound and a gradual recovery, according to a new report from Moody’s Investor Service.

Commercial property values fell 42.9% from their peak in October 2007 and will remain stunted far longer than cash flows, according to the report.  Analysts further predict that values will decline 45% to 55% from that peak in months ahead.

“We believe that valuations will rebound off the bottom and settle in for the longer term at levels 30%-40% below the market top as liquidity and investors return to the sector and property cash flows begin to recover,” said Nick Levidy, Moody’s managing director.

Analysts at Moody’s see cash flows that back commercial mortgage-backed securities (CMBS) will recover slowly over the next several years.

However, refinancing risk on CMBS will grow as maturities near on bonds issued during that 2007 peak.  Moody’s anticipates downgrades of up to three levels for many tranches of 2006 to 2008 vintage CMBS, but ratings on the most senior bonds should remain at current levels.

“Cash flows for properties with short-term lease structures, such as hotels and multifamily, will likely hit bottom in 2010 or early 2011,” said Levidy.  “The bottom for office, retail and industrial properties will take longer to form.”

As gloom and doom seems to be hitting the commercial market, the St. Louis Refinancing Group news team advises commercial business owners with properties adjusting in 2010 to call Liberty Lending Consultants.

Steve Swan and Doug Stahlschmidt will give you the personalized service needed to help refinance your commercial loan or perhaps help get you the business financing you need.  They can be reached at 314-698-4092.

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