Billions in value have evaporated among distressed US commercial properties in past year - Jacksonville Business Journal

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Billions in value have evaporated among US commercial properties

found a net total of $6.89 billion in property value has been depleted across 460 properties that secure debt in commercial-mortgage backed securities loan portfolios since August 2021. Fifty-five properties did see an increase in value at reappraisal, although the majority reappraised at less than $1 million higher from when the current loan was initially issued on the property.

among 719 commercial properties reappraised since Covid-19, but that included a wider net of properties.When a property is facing a specific level of distress — where the foreclosure process has been initiated, for example — an appraisal will be ordered so the lender can more accurately substantiate a property's value.

While the office sector only had 46 properties reappraised, it represented $947.6 million of total property value loss between July 2021 and July 2022., head of CMBS research at DBRS Morningstar, said delinquency rates have continued to drop across the CMBS spectrum as fundamentals hold up and property types that were especially affected by the Covid-19 pandemic recover.

Spending money so those older buildings can keep up with the new Class A office product that's lured tenants more successfully, especially since the pandemic, becomes more challenging with more muted tenant demand and, perhaps, the inability for owners to push rents, he added., senior managing director at Trepp LLC, said owners of office buildings with major or multiple lease expirations in the next three years could struggle the most.

 

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