Impact of CRE Distress Varies Widely Market to Market
June 18, 2010
Not All Markets Are Being Hit Equally Hard, But Resulting Impact On Business Still Acute
Mark Heschmeyer | CoStar Group
While the amount of CMBS loans falling delinquent and/or defaulting continues to escalate, doubling almost every six months, the damage inflicted on property values and deal volumes varies widely across local cities. Some metro areas are being ravaged while others are being spared, according to an exclusive analysis of local distress compiled for CoStar Group.
In Lansing, MI, for example, where CMBS loans back more than 50 properties, nearly 1 in 5 loans are in the process of defaulting. But in Wichita, KS, or San Luis Obispo, CA, where CMBS loans also back more than 50 properties, the default rate is less than 1 in 100.
The data was compiled exclusively by Investcap Advisors LLC and QuantumRisk LLC for CoStar. Investcap Advisors provides surveillance data on the CMBS market and QuantumRisk is a registered investment advisor in Colorado. The two firms analyzed more than 85,000 properties backing more than 52,000 loans and developed a probability of default ratio and loss severity calculation for 405 U.S. markets.
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