RCA: Sales Rise Along With Distress

NEW YORK CITY-Sales in the major food groups across the US this spring have shown either an uptick or a leveling-off in decline, according to Real Capital Analytics. At the same time, however, troubled assets are on the rise.

RCA says troubled commercial properties have more than doubled as of the end of May, with the value of assets in default, foreclosure or bankruptcy now exceeding $107 billion; $56 billion of that total is new this year. T.S. Eliot once called April “the cruelest month,” and thanks largely to the bankruptcy of General Growth Properties, that has proven to be the case in commercial real estate, with April adding a record $19.5 billion in distressed assets. Much of that total was due to the bankruptcy of General Growth Properties, an event that RCA says accounted for $13.5 billion of the April total.

When GGP is removed from the equation, April and May averaged $5.5 billion of new distressed assets per month. However, RCA says June is shaping up to be “among the worst of the year,” with more than $10 billion in newly defaulted mortgages already recorded for the month.