Receiverships soar, putting distressed commercial properties on market

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Real estate professionals say there’s a disconnect in the market as buyers ‘smell blood in the water’ while sellers cling to ‘unrealistic valuations’

Buyers smell blood in the water as distressed commercial properties are put up for sale. But so far, sellers of that troubled real estate are refusing to accept rock-bottom values.

Still, real estate pros say there’s a disconnect between buyer and seller expectations. If the two sides start to come together, the number of transactions could boom – particularly as defaults are expected to increase. More troubled properties are expected to hit the market as real estate companies struggle with higher borrowing costs and miss their loan payments. Lenders are losing confidence and are increasingly pushing their borrowers’ projects into receivership.

That compares to 143 real estate and construction receiverships last year, according to the data. That was up from 108 in 2019, before construction and borrowing costs soared. “It’s going to keep us busy for some time,” he said. “We’re going to see an increase. When is it going to bottom out? I wish I knew.”

Minto has also been pitched on two residential developments sites in the Vancouver area; a redevelopment in Surrey, B.C.; a townhouse subdivision in Simcoe, Ont.; vacant land and residential sites near Victoria; vacant land with architectural and landscape drawings in Langley, B.C.; and a plot of land in Hagersville, Ont.

Brokers say they have to canvass more buyers and work harder to convince a potential buyer to consider a troubled asset. Then, the buyer is not willing to pay close to what the creditor envisions, and lenders are not willing to slash prices and lose money.

 

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