Commercial Loan Defaults Indicate Future Problems
The delinquency rate for securitized loans in North Texas is 50% higher than the national average, and several prominent commercial properties are among those identified as having delinquent loans or loans likely to land in default (watchlist loans), according to Trepp LLC a national real estate research firm.
Today Foreclosure Listing Services in Addison announced that the Four Seasons Resort in Los Colinas home of the PGA's Byron Nelson Classic is set for foreclosure on February 2nd. The $175 million delinquent loan had been on the watchlist . Four Seasons did a $60 million renovation over the past two years.
There are over 700 commercial property loans in the area that are cause for concern. Here's a breakdown by property type:
- Industrial - $218.3 M
- Hotel - $568.2 M
- Multifamily - $1.43 B
- Office - $1.9 B
- Retail - $2.1 B
- Other - $600 M
- ALL TYPES $6.81 B
The largest loan on the watchlist is the $232 M loan for Galleria Towers. In addition to the $1.45 billion in delinquent loans, $972.5 million worth have been transferred into special servicing (when the management of the loan is transferred from the master servicer to a special servicer. This can occur when a borrower has defaulted or, in the reasonable judgement of the master servicer, is likely to default and be unable to fix the issue within a reasonable time). In order to make any significant changes to a securitized loan, you have to be talking to a special servicer.
Interesting statistics as we begin to hear that the recession is healing. Are we headed for a relapse? Caution ahead!
Sources: Trepp LLC, Dallas Business Journal
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