Vacancy rates have edged up and rents have retreated acrosscommercial property sectors in Detroit, though the office andindustrial markets have registered the most dramatic softening inrecent years. In addition to another year of operational issues,Detroit commercial property owners will have to face the challengesassociated with refinancing maturing debt, a difficult task even inmarkets poised for growth.

Roughly $1.5 billion of CMBS debt, or 17% of the totaloutstanding in the Detroit marketplace, is slated to mature during2010 and 2011, nearly 16% of these loans already report debtservice coverage ratios of less than 1.0. Since straight termextensions will do little to alleviate the underlying issues forthese at-risk loans, and further hits to NOIs are anticipated inthe near term, heightened foreclosure activity is likely tooccur.

Persistent economic woes, softening commercial real estatefundamentals and tight credit markets will result in growingdistress in the Detroit marketplace. As of early 2010, the metroarea already ranked second behind Las Vegas in total distressedasset dollar volume, when scaled to the market's size. In order toavoid foreclosure-related losses, banks

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