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Brecht Palombo is an accomplished real estate investment sales broker and auctioneer who is licensed throughout New England. Brecht has been the lead on a number of large Boston area auction transactions and has sold numerous residential developments and multifamily properties. Additionally Brecht is also CCIM candidate and represents Tranzon Auction Properties thoughout Southern New England.

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Commercial Lenders Report More Default

May 1st, 2008 • Related • Filed Under
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Most of the first quarter thrift reports are in from Massachusetts’ commercial lenders. In my last Non-Accrual and REO report for these lenders I reported that across the board lenders were reporting more non-accrual and OREO. You can check that post if you need a definition for non-accrual, OREO is the property that a lender now owns as a result of foreclosure.

About 85% of commercial lenders in Massachusetts are reporting first quarter results right now so I’m not prepared to give total balances for the state. Of those now reporting bank owned property balances are up by 5.4% which isn’t too bad. Right behind this however is an increase in non-accrual by more than 56%. Non accural is the last stop before REO unless either:

  1. The note is sold to a third party
  2. The balance is paid or settled with the bank
  3. The property is sold at the foreclosure sale

Short of any of these resolutions the balance ends up in REO. Commercial lenders in Massachusetts have nearly $200,000,000 in non accrual at the moment and this is with a couple of key players reporting.

In my previous report most of the REO and non-accrual was clearly construction related. In this report there is a significant amount of commercial/industrial.

Today’s CoStar Watchlist from Mark Heschmeyer shows a collection of New Enlgand Multifamily properties. This is the first time I’ve seen this since I began reading Mark’s report.

This year is going to provide big opportunities for those ready to capitalize. If you have some money or you can put some money together, now is the time. Be prepared.

Mark Heschmeyer’s Property Watch List - CoStar

Property Property Type CMBS Special Servicer Notes
65-71 High St., Southbridge, MA Multifamily, 5 units CBA 2005-1 Midland Loan Services The property is 100% vacant with all units inhabitable. Borrower started a rehab of the property and all, but one unit has been completely stripped down to the studs. The borrower ran out of funds to complete the rehab and appears to have abandoned the property.
7-9 Mulberry St., Attleboro, MA Multifamily CBA 2005-1 Midland Loan Services The asset transferred to special servicing last month. MLS will schedule property inspection once borrower contact has been made and MLS can assess default status.
33 Cottage St., Lynn, MA Multifamily CBA 2005-1 Midland Loan Services The loan was 60 to 89 days delinquent as of mid March.
92 Girard St. & 127 Marion St., Springfield, MA Multifamily CBA 2005-1 Midland Loan Services The property has been boarded up to renovate, but borrower has ran out of funds with approximately 90% completion. Property inspection was scheduled to verify that all repairs have been made, but the property manager did not show up. Midland will request another inspection to verify what repairs remain and then make a determination regarding a deed in lieu per the borrower’s request. Property is listed at $160,000 with little interest to date.
27-29 Pleasant St., Attleboro, MA Mixed Use CBA 2005-1 Midland Loan Services The file was transferred into special servicing last month. Midland was to schedule a property inspection.
1224 Pleasant St., Fall River, MA Mixed Use CBA 2005-1 Midland Loan Services The loan was 60 to 89 days delinquent as of mid March.
1524-1528 Pleasant St., Fall River, MA Mixed Use CBA 2005-1 Midland Loan Services The loan was 60 to 89 days delinquent as of mid March.
73-75 Water St., Lawrence, MA Mixed Use CBA 2005-1 Midland Loan Services The loan was 30 to 59 days delinquent as of mid March.
22 Cutts St., Biddeford, ME Multifamily, 10 units CBA 2004-1 Midland Loan Services The loan was 30 to 59 days delinquent as of mid March.
413 Main St., Lewiston, ME Mixed Use CBA 2005-1 Midland Loan Services The loan was 60 to 89 days delinquent as of mid March.

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