the rising number of CMBS restructurings helped push up the amount of distressed real estate in the US by almost 41 percent in April, taking the total value of troubled property in the country to more than $184.6 billion.
According to data provider Real Capital Analytics, a recently revised approach to CMBS loan modifications has contributed to $12.8 billion worth of new real estate distress being reported last month. In September, the US Internal Revenue Service said CMBS special servicers could pre-empt defaults by allowing loan modifications “prior to an imminent default”, rather than only afterwards. Approximately 60 percent of the new troubled real estate recorded by RCA is tied to CMBS-backed assets, up from just 5 percent in March.
RCA classes distressed real estate as having fallen into default, foreclosure or bankruptcy. Including real estate where troubled loans have been restructured and resolved, the amount of distress climbs to $239 billion.
The climb in the level of real estate distress in April came primarily from the office and hotel sectors
In Japan, while the numbers are not as huge; there are substantial amounts of CMBS coming to maturity and there is still a major question mark in the market as to how this will be resolved in the next 2-3 years
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