Distressed CRE loans declined in January

Distressed commercial real estate loans fell in January.

A report from Delta Associates showed that commercial real estate companies may be getting better at covering loan payments, as delinquencies declined during January.

The report, published in The Washington Post, showed that the value of distressed loans has fallen approximately $4.7 billion since October, citing figures from Real Capital Analytics. In January, distressed commercial real estate loans totaled $166.9 billion. This is much lower than the high of $191.5 billion, which occurred in March 2010.

Mike Donnelly, senior associate for Delta Associates, noted that declines will continue through the remainder of 2012, according to the article. However, by 2013, more than $300 billion in loans will mature, which could challenge these improvements.

The U.S. office market holds the highest amount of distressed loans, with $41 billion, the news source noted. The figure has dropped 2 percent from October's statistic – a total decline of $829 million. Apartment property distress levels declined 0.9 percent during that same time period to $35.2 billion.

A report from Ernst & Young suggested that the continued maturation of real estate loans could prove to be useful for commercial real estate companies. This is because of a heightened affordability factor utilized by banks to get industry members to purchase distressed property.

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