Lenders more lax on liquidation

By Buck Wargo

Fri, Feb 26, 2010 (3 a.m.)

The amount of distressed commercial real estate in Las Vegas is steady and high.

In its latest report, New York-based Real Capital Analytics, which tracks commercial property across the country, said Las Vegas still holds the No. 1 spot in the nation in terms of percentage of its properties in financial trouble as of Feb. 3. The $18.8 billion in local troubled assets have held fairly steady for several months.

Of the $18.8 billion, 58 properties worth $2.7 billion have been foreclosed upon. Another 15 properties worth $1.8 billion have had their loans restructured and another 214 valued at $14.2 million remain in financial distress, said Dan Fasulo, managing director of Real Capital Analytics.

Many have predicted a “flood of distressed assets coming to the market” across the country, and investors raised hundreds of billions of dollars to buy them, but that hasn’t been the case, Fasulo said.

Lenders no longer feel pressure to liquidate and as a result an increasing number of these distressed properties are being restructured, he said.

The most common restructuring is to extend the maturity date, although the interest rate, loan balance and other terms can be modified, Fasulo said.

Las Vegas real estate brokers have been reporting that as well.

“I think we will see less foreclosures come to the market because the banks are of the mind-set to work out the issues with the borrowers to the extent possible,” said Mike Mixer, managing partner for Colliers International.

“I think everyone is on the same page that a glut of commercial foreclosures starts to bring down the quality projects. There is a concerted effort to work out those loans that can be worked out.”

Mixer said a percentage of troubled

properties will go bad and hit the market, but he said he expects in the next 18 months those properties will be flushed through the market and hopefully the bottom will be

set.

“Then the number of investors and buyers sitting idle will start to jump in and that will create its own sense of a market turn,” Mixer said. “We will get some momentum swinging in the opposite direction.”

In the past 12 months, Real Capital Analytics reported that of the $1.3 billion on the market in Las Vegas, only 28 large commercial properties worth $261 million were sold. The biggest chunk — $126 million — was retail property. That was followed by $47 million in industrial properties and $36 million each in apartments and office properties.

Among the financially troubled properties in Las Vegas, hotel properties make up $9.1 billion or just less than half of the $18.8 billion total, according to Real Capital Analytics.

About 8.6 million square feet of retail property worth $2.2 billion is troubled in addition to $723 million in industrial buildings and $523 million in office buildings.

Home availability is down to mid-2005 levels.

Research firm Applied Analysis reported that the number of homes on the market in Las Vegas is on par with July 2005 levels, when investors began to divest properties and the prices of existing homes started to flatten.

In the past year, homes on the Multiple Listing Service are down 48 percent or 10,363 units to 11,184 homes, said Brian Gordon, Applied Analysis principal.

Of the properties on the market, 16 percent are owned by banks and 44 percent are homeowners trying short sales because they owe more on the mortgage than the home is worth, Gordon said.

Of the properties under contract, 79 percent are potential short sales awaiting approval from banks.

Of the 11,184 homes on the market as of the second week of February, 5,984 or 53 percent were vacant. Another 1,359 or 12 percent were rentals, and 34 percent were occupied by the homeowner, according to Applied Analysis.

In other news

• The Forum Shops at Caesars announced openings in 2010.

Coming this summer is Max Brenner, Chocolate by the Bald Man, a restaurant celebrating chocolate. Brenner has 28 locations worldwide and the Las Vegas restaurant will be the third in the United States; the others are in New York and Philadelphia. It will be the largest of his restaurants at 9,400 square feet.

Another store that will open this

summer is Las Vegas’ first Christian Audigier location. It features luxury street apparel and accessories for men, women and children. Audigier is the French designer behind the rhinestone-encrusted Ed Hardy brand.

Two stores that opened recently are Paradiso, an apparel and handbag store, and Marshall Rousso, which sells women’s clothing.