Atlanta Foreclosures Hitting Commercial Real Estate

by Simon Lindsay on cities

The issue of Atlanta foreclosures in Georgia might soon be felt among commercial properties in the city. As of July 2010, real property research company Trepp LLC reported that around $1.6 billion worth of commercial loans in the area were delinquent for at least 60 days. The firm also reported that the amount is one of the highest among cities in the region in terms of delinquent commercial loans.

Aside from the high numbers of foreclosed homes in Georgia, the area will likely have to deal with possible commercial foreclosures in the coming months if the loans were not made current or another agreement is made with the banks. The report from Trepp has also revealed that the city's commercial mortgage backed securities (CMBS) that are delinquent for 30 days at least have doubled in number since the same month of 2009.

Borrowers are reportedly in negotiation with lenders for refinancing options, while some owners have already lost their properties to foreclosures and saw them ending up as bank owned properties. The most high profile CMBS foreclosures include loans that supported the purchase of the Midtown tower, Campanile, and the Equitable landmark building.

According to local real estate market analysts, Atlanta foreclosures will be worse if commercial loan delinquencies were not addressed. The largest CMBS in the city that is past its due date for 60 days is the one used by Transwestern Investment Co. to purchase Tower Place. The loan is worth $50.5 million.

Investors and private buyers who purchase foreclosed homes for sale, and those who are also into commercial property investing, will likely have a lot of opportunities to make a purchase in Atlanta in the coming months. That is, if owners of these commercial buildings and their lenders failed to come up with an alternative plan.

Local analyst have stated that the problem with commercial loans is the product of loose standards that govern underwriting and high levels of speculation, the same factors that led to the demise of the residential property market. Analysts have also revealed that CMBS represents only a quarter of the commercial property debt, which means a lot more commercial properties might end up as Atlanta foreclosures and they might be outside the CMBS segment.

disclaimer