ENCINO, CA-Stabilizing operating conditions, firming values and strengthening recovery rates will inspire lenders to increase their disposition of distressed properties, according to a new report from Marcus & Millichap. The report by Hessam Nadji, managing director of research services, states that despite this uptick in velocity of distressed deals, "a flood of liquidations will not occur."
The report goes on to explain that many lenders "extended loans or warehoused reclaimed assets through the downturn, waiting for values and operations to improve before taking REO properties to market." As the pace of sales has accelerated this year, lender confidence has improved, and more lenders have begun moving distressed assets to market.
Nadji's research shows that distressed sales activity during the first half of 2010 nearly tripled the activity levels recorded in the same period in 2009, with assets under $5 million comprising over 80 percent of the transactions. This controlled liquidation will continue over the next year as lenders clear their balance sheets of bad commercial real estate debt, whether through note sales, short sales or REO dispositions.
For the full report, click here:
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