
Commercial Real Estate Info
I have written not too long ago about the increase in commercial real estate values in Orange County, California…particularly sale values. Simply because allowances for loan and lease losses (ALLL) are a direct hit to earnings, and since allowances are at ridiculously low levels, bank earnings (and capitalization ratios) are wildly more than-stated. As noticed in the following chart, industrial home values have fallen over 40 percent given that the beginning of 2007. Commercial real estate problems exacerbate increasing unemployment prices and declining consumer spending.
Credit threat can lead to loan defaults prior to maturity such defaults typically occur when a loan has negative equity and money flows from the house are insufficient to service the debt, as measured by the debt service coverage ratio (DSCR). The commercial real estate industry is shifting to an overpriced industry, particularly for core properties in the top markets, said genuine estate research firm …