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Non-Performing Loans May Present Investment Opportunities

CCIM.com
Posted March 21st 2012

Real estate debt continues to weigh on the financial sector with commercial real estate loans accounting for approximately $784 billion of assets at the top 100 U.S. banks as of 3Q11, according to an Ernst & Young 2012 distressed real estate investing report. Commercial real estate loans held by the remaining U.S. banks totaled $750 billion. Smaller banks appear to be bearing the burden: Commercial real estate loans constituted only 7 percent of the total assets of the top 100 banks compared with 26 percent of total assets of the remaining banks.

With an abundance of commercial mortgage loans coming due, commercial real estate will continue to impact the balance sheets of financial institutions for the foreseeable future: An estimated $800 billion to $1.2 trillion in U.S. commercial real estate loans are scheduled to reach maturity over the next five years.

The loans may present significant investment opportunities, according to the report. With an estimated one-third of borrowers unable to refinance due to property values hovering at or below loan amounts, financial institutions will be left with the limited choices of foreclosing on the assets, restructuring the debt, or selling the loans.

Small(er) Markets, Big Opportunities | CCIM Institute

Small(er) Markets, Big Opportunities | CCIM Institute


495 Commerce Center
is a 110 acre master planned, mixed-use business park in McAllen, Texas. 495 Commerce Center is the only Class "A" business park south of San Antonio and is professionally planned to put businesses on the fast tract to success. This prime development is thoughtfully designed with landscaping elements that enhance the whole park from the jogging trails to the central water feature focal point. 

495 Commerce Center
is a secure investment. The business park offers various sized lots starting at 1 acre that are ultimately customized to fit the client's needs. An Owners Association and Common Area Maintenance program promote property values while the Architectural & Development Standards control building types, uses, mix, as well as the quality of construction, parking, landscaping and the architectural character of the project.

This Month in Real Estate (US) February 2012

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MIG Targeting Texas, Seattle, Portland and Salt Lake City for Acquisitions - CoStar Group

MIG Targeting Texas, Seattle, Portland and Salt Lake City for Acquisitions - CoStar Group

Top Commercial Real Estate Trends to Remain Same in 2012

Commercial Real Estate Comeback?

Longhorn Steakhouse New McAllen Location

Petro Gas Opens McAllen Location

UPS Moves South Texas Operation to McAllen

10 Stocks That Show the Real Estate Boom Has Arrived

By Frank Byrt   3/6/2012


Stock quotes in this article:HME, ESS, UDR, SPG, PSA, HCN, PLD, BXP, AVB, ACC 


(Story updated to add that Simon Property Group is in agreement to develop a retail outlet center in Shanghai.)

BOSTON (TheStreet) -- The U.S. real estate market is in two worlds, with residential housing in the dumps and not yet worthy of consideration for investing. But commercial real estate, in the form of real estate investment trusts (REITs), is prospering.

For example, demand for rental apartments is booming because an uptick in employment has people relocating to areas with job opportunities. While at the same time, home ownership is at 12-year lows and not seen growing significantly anytime soon, and that boosts the earnings outlook for apartment-owning REITs.

And demand for commercial real estate, which includes shopping malls, office buildings and storage facilities, is showing steady growth, aided by years of almost no new construction, limiting supply, while a strengthening economy increases demand.

"Help from the current, very modest recovery has been enough to lift occupancy and rental rates for an industry group that includes office buildings, shopping malls, warehouses, industrial spaces, apartments, and hotels, to name a few," Fidelity Investments said in a research note. "These positive fundamentals have, in turn, boosted net income for REITs."

That recovery has been little noticed by many individual investors, given their still-strong memories of the mortgage-backed securities crisis and the plunge in residential home values, which has poisoned their views on all things real estate.

But REIT securities have been climbing since March 2009. The benchmark FTSE NAREIT Equity REITs Index is up 5.8% this year versus the S&P 500's 9.3%, after gaining 8.3% last year compared to the S&P 500's 2.1% rise. And that was after two straight years of 28% annual increases in the FTSE NAREIT Equity REITs Index.

Industrial property REITs are doing the best this year, with a 15.6% return, while mixed use (office and industrial) REITs are up 13%. As for residential REITs, S&P Capital IQ recently raised its fundamental outlook for the sub-sector to "positive" from "neutral."

"In our view, many Americans may ...

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Warren Buffett: It’s Time to Buy Real Estate

Warren Buffett: It’s Time to Buy Real Estate