Its most recent move was the appointment of CBRE last week as primary advisor for FDIC's portfolios of Owned Real Estate nationwide. CBRE will manage and market residential and commercial properties that come to FDIC. As receiver for failed financial institutions, FDIC is expecting the number of such properties to increase significantly as the--now official--economic recession worsens.
Indeed, FDIC indicated last week that bank loan losses in Q3 surged--but the reserves, or coverage ratio, which banks are required to set aside did not match that pace. This is the tenth consecutive quarter that this ratio has dropped. Net charge-offs totaled $27.9 billion in Q3, or 1.42%, according to the government agency's Quarterly Banking Profile. It was 0.57% in Q3 2007.
While these figures are a worrisome trend for the financial system--and real estate industry as a whole--they also represent potential buying opportunities for distressed funds that have been gathering on the sidelines for these times. "This is definitely an area we will be looking at, especially if the government is not going to be buying distressed assets under TARP," one executive with a private equity fund tells GlobeSt.com.
In fact, failed bank real estate assets are already making their way onto the market. In September FDIC placed nearly 300 performing loans totaling $360 million on the market--assets that had belonged to Indymac Commercial Lending Corp., the commercial lending subsidiary of IndyMac Bank.
With its new mandate, CBRE's Public Institution & Education Solutions team will oversee ongoing client services for FDIC. Theodore Carter, executive managing director in CBRE's Washington, DC office, leads that group. Ken Pearson has been named the alliance director for the account and will lead a nationwide team of asset managers, property managers and marketing personnel to support the day-to-day aspects of the account from Dallas. CBRE will also incorporate its various lines of business to assist, including Valuation, Property Management, Leasing and Sales.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
