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By HUBBLE SMITH
LAS VEGAS REVIEW-JOURNAL, MARCH 27, 2009
Commercial real estate hasn't been as heavily besieged with mortgage delinquencies as the residential sector, but an upward trend shows it's something bankers are monitoring closely.
Delinquency rates that were around historic lows just two years ago are inching up.
The level of outstanding commercial and multifamily mortgage debt grew to $3.5 trillion in the fourth quarter of 2008, up 0.7 percent from the previous quarter, the Mortgage Bankers Association reported last week. The total was an increase of $166 billion, or 5 percent, from the end of 2007.
Travis Nelson of Nevada Title Co. said the number of commercial defaults started climbing last year and has continued to climb through the first quarter. He counted 34 notices of default in the first half of March, compared with 28 in the first half of February. Defaults are outnumbering commercial sale transactions roughly 2-to-1, he said.
Nelson also sees the mix of property types changing from vacant land, which produces no revenue, to shopping centers, professional business offices, restaurants and cocktail lounges.
With the credit crunch and declining property values, it's getting increasingly difficult to refinance commercial loans, he said. That's why a lot of vacant land owners have gone into default.
Read the full article at LVRJ.COM
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