Real Estate

Commercial real estate foreclosures jumped 117% in March as trouble looms

The commercial real estate market is starting to buckle under the weight of higher interest rates and remote work. 

There were 625 commercial real estate foreclosures in March, up 6% from February and 117% from the same time last year, according to a new report published by real estate data provider ATTOM. 

The figure is calculated based on commercial properties with at least one foreclosure filing — including default notices, scheduled auctions and bank repossessions — entered into the ATTOM Data Warehouse during the month.

California had the highest number of commercial foreclosures in March, with 187 properties. While that marked an 8% decrease from the previous month, it is a stunning 405% jump from the previous year. 



Read more
Real Estate

Powell: ‘There will be bank failures’ caused by commercial real estate losses

Federal Reserve Chair Jerome Powell said Thursday he expects to see some banks fail due to their exposure to the commercial real estate sector, which has declined significantly in value following the shift to remote work.

Powell said the banks that are in trouble with falling office space and retail assets are not the big banks, which were designated as “systemically important” in the aftermath of the 2008 financial crisis. That episode, which resulted in a taxpayer bailout of the financial sector, was also triggered by unsound real estate assets.

Rather, the banks at risk of failure now Powell identified as smaller and medium-sized.

“This is a problem we’ll be working on for years more, I’m sure. There will be bank failures,” he said during a Thursday hearing on the Fed’s monetary policy in the Senate Banking Committee.

“It’s not a first-order issue for any of the very large banks.

Read more
Real Estate

Chinese investors offloaded US$31.7 billion of US commercial real estate over last 5 years, driven by capital controls, lending caps

Chinese investors, once among the most active buyers of commercial property in the United States, sold US$31.7 billion of US commercial real estate between 2019 and last year, 15 times more than what they acquired during the same period, according to MSCI Real Assets, a real estate and infrastructure data provider.

The divestment trend is expected to continue amid the high interest rate environment, leading to continuous declines in asset values in the US. Additionally, some Chinese investors are rushing to sell their foreign real estate holdings to free up cash as they face a worsening property crisis in China, according to analysts.

The largest sale occurred in 2019 when GLP, a Singaporean logistics company backed by a consortium of Chinese investors, sold industrial assets across multiple funds to Blackstone Real Estate Partners, amounting to US$18.7 billion. Excluding the GLP deal, an additional US$11 billion in assets were sold
Read more
Real Estate

Limited exposure to U.S. commercial real estate giving Canadian bank investors hope. Why? - National

Limited exposure to U.S. commercial real estate (CRE) is giving shareholders hope that Canada’s big banks can weather the storm that has rocked rivals in the United States and Europe.

However, investors will be on alert for signs of stress when Canada’s top six banks next week post first quarter earnings, that will continue to be pressured by high bad loan provisions.

The beleaguered U.S. CRE sector has taken a toll on banks in Europe and Asia, with borrowers at the risk of defaulting on loans as high interest rates and low occupancies hit valuations.

The recent sell-off of New York Community Bancorp has soured sentiment and dragged down U.S. peers, reviving fears of a global contagion stemming from the sector.

Click to play video: 'SVB collapse: What other US banks are at risk of failing?'

SVB collapse: What other US banks are at risk of failing?

“While the space is undoubtedly challenged … it will be largely unimpactful to the Big-6 Canadian banks

Read more
Real Estate

Commercial Real Estate Lending Threatened by New Rules for Banks: MBA

  • Basel III proposals would cripple commercial property financing, MBA CEO Bob Broeksmit said. 
  • The proposed regulation would require banks to maintain more capital to protect against loan losses.
  • “Basel III could be the end of bank real-estate finance as we know it,” Broeksmit said. 

Proposed rules that would require bank lenders to maintain a thicker capital buffer to protect against losses will intensify ongoing real estate turmoil, the head of the Mortgage Bankers Association said this week. 

MBA CEO Bob Broeksmit slammed the proposal, saying that it threatens to hold back bank lending and stifle liquidity in the commercial property sector. 

“They’re called the ‘end-game proposal,’ but only one of those words is accurate. Basel III could be the end of bank real-estate finance as we know it,” Broeksmit said

Read more