WASHINGTON, DC-The volume of distressed properties appears to have plateaued for this cycle at $186.9 billion, which is holding near the peak of $191.5 billion in October 2010, according to a new report by Delta Associates that uses numbers provided by Real Capital Analytics. Delta has been noticing this trend for several months, the firm’s CEO, Greg Leisch, told GlobeSt.com in an earlier interview.
This latest examination of the study looks beyond the industry’s immediate sigh of relief and asks the question: when will the volume of distress finally begin to recede? Unfortunately, 2012 is the popular answer. To that end, Delta notes that the distress plateau began in the spring, but it doesn’t foresee any meaningful progress until 2012, as lenders continue to extend debt obligations, and commercial property values are stabilizing in many markets.
Next year may well prove to be another painful 12 months, the report notes. There is some $300 billion of loans coming due. Also, fundamentals still have a long way to go if they are to reliably support the increasing property valuations being spotted in certain markets.
The report finds that the office sector continues to represent the largest share of distressed real estate at $45.6 billion, with apartments moving into second place with $37.8 billion of distress. The hotel market, which has $33 billion in distress, is in third place.
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