This may be the year that billions of dollars in commercial mortgages go belly up. These loans were financed in 2007 and are maturing this year. That means some commercial property owners will be faced with huge balloon payments and for some, a major headache to pay them off.
The Federal Reserve stated in its semiannual Monetary Policy Report to Congress on Tuesday that commercial property prices were becoming a "growing concern.”
Specifically, the report said, “"Commercial real estate (CRE) valuations, which have been an area of growing concern over the past year, rose further, with property prices continuing to climb and capitalization rates decreasing to historically low levels,"
While commercial property debt remains small compared to the overall economy the report said that the rising "valuation pressures may leave some smaller banks vulnerable to a sizable CRE price decline."
For the full scoop, go to: www.NewsForInvestors.com