The agency cites figures that have become route knowledge withintheindustry: Between 2010 and 2014, about $1.4 trillion incommercialreal estate loans will reach the end of their terms.Nearly half areunderwater as commercial property values have fallenmore than 40%since the beginning of 2007. Increased vacancy ratescontinue toexert a powerful downward pressure on the value ofcommercialproperties.

It will be the smaller regional and community banks--which havehigherconcentrations of such loans--that will experience adisproportionateshare of defaults, compared to larger national ormoney center banks,the report found.

The report leaves little in the way of conclusions orrecommendationsother than to acknowledge that this is a complexsituation with noeasy path out. The report may, though, facilitatelobbying efforts bythe commercial real estate industry. Suchorganizations as the RealEstate Roundtable and Commercial MortgageSecurities Association havebeen pushing for--or working torefine--legislation that would helpease capital constraints. In thecase of the Roundtable its currentpush is to free restrictions onforeign investors that seek to buy USreal estate. CMSA, for itspart, is working to keep securitizationrequirements for CMBS asindustry-friendly as possible.