Commercial real estate troubles continue to erode US banks balance sheets. The Federal Insurance Deposit Corporation's latest Quarterly Banking Profile (4th Quarter 2009), released this week showed US banks and thrifts had almost $60 Billion in distressed commercial real estate assets on their books, this is up from $52 Billion three months earlier (3rd Quarter 2009). The number of US banking institutions that where listed on the FDIC problem list for YE 2009 there were 702 insured institutions which was up from 552 from the previous quarter (3rd Quarter 2009). The commercial real estate situation continued to get worst during 2009 when we look at distressed asset foreclosed on by US banks and thrifts. The big question will be will these assets expand or decline in 2010 and 2011?
What are we seeing at Stella Capital. California is seeing its fair share of these distressed commercial real estate assets and bank closures. What we have witnessed through out 2009 is that the US banks have been very sluggish to move these distressed properties off their books primarily because the bank were not prepared to this situation. Banks had not put special asset teams together to analyze the real estate and get a plan for disposing of the properties they foreclosed upon. Now that we are into 2010, many of these special asset teams are in place and some of the banks and thrifts seem to have a process and plan in place. Even if the banks are slow to move the properties the bank regulators should start to pressure them to dispose of the real estate. Overall, Stella Capital will see more properties from the banks which should provide some good buying opportunities.
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