At the close of 2008 the nation’s lenders reported $28,759,725,000 in distressed commercial real estate loans. At distressedpro.com we’re projecting double that figure at the close of 2009.
We won’t have final figures until mid-late February for the close of 2009 but we’re projecting the final reporting for distressed commercial real estate loans for US banks to reach $56 Billion. Late and non-accrual CRE loan totals have been steadily increasing throughout 2009. The most recent reporting showed a 13.98% increase in a single quarter keeping pace with the same jump in the previous quarter. These figures account for 30 and 90 day late loans as well as non-accrual loans.
CRE loans reported as 90 days late grew at the fastest pace with a quarterly increase of 24.35%. Non-accrual loans which make up the lions share of the distressed note reporting jumped by 17.42% from the previous quarter. Non-accrual loans are a distressed notes’ last stop on the way to foreclosure. Only a very small percentage of non-accrual is ever recovered.
Year to date commercial real estate charge-offs increased nearly four-fold from the same period last year (.17%) but are still at less than 1% (.62%). It seems inevitable with the increasing problems that this number will jump significantly. By contrast 4.79% of construction loans were charged-off by the end of Q3 2009. Both of these figures have a long way to go, the question is when will lenders start taking the hit on their balance sheet. Experts are saying 2010 is the year.
An increasing number of institutions are dealing with commercial real estate problems.
- 1469 Banks Reporting 90-Day late CRE Loans
- 4518 Banks Reporting Nonaccrual CRE Loans
- 3121 Banks Reporting Commercial REO