Central Texas is hard-hit by Commercial foreclosures

Although Texas State is not in the forefront of residential foreclosure listings, according to latest statistics, it attracts attention in the foreclosure scenario of commercial properties. News is the Austin area commercial property market is experiencing a new turn by the surge of high-profile commercial properties.

Foreclosure postings are emerging in respect of – undeveloped land; two large apartment complexes; one shopping center; and one 12-building office campus. Two prominent companies listing foreclosure commercial properties reported that large number of commercial properties have been listed for foreclosure sale public auction on 4^th May.

It should be remembered that although the foreclosure laws of Texas State admit both judicial and non-judicial foreclosure processes, out-of-Court Trustee Sales are more common, by inserting a “power-of-sale” clause in the mortgage agreement. Eventually foreclosure process in all parts of Texas ends within 40 to 45 days maximum.

As it is in Austin and Round Rock area, 20 commercial properties, representing nearly $320 million of original mortgage loans are slated for the public auction. There is a diverse mix of properties, including one 600-acre subdivision of open land; apartment complexes that are not performing well; and vacant office buildings.

Experts in Real Estate circle have no clue about this upsurge in the number of commercial foreclosures in a month. They are not sure whether this is just a blip or a sign of more trouble brewing in the market for commercial properties of that area.

But many of them are of the view that lending banks are no more appearing to follow the philosophy of “pretend and extend” in respect of troubled mortgage loans. Some banks were hesitant to go forward and foreclose big commercial properties, because if they do so, they may have to record in their books only the reduced values of those properties, in the present gloomy market conditions.

But the experience of banks has shown them to cash-in before the market is going down further. For example, one of the scheduled auction properties is the Austin Oaks office complex, consisting of a dozen buildings in North West Austin. The rents have dropped dramatically in that area and vacancy rate is near about 25 per cent. Possibly the lenders have gauged further losses if the property is kept unsold.

Posted by Amitesh Kumar on Apr 19 2010. Filed under Austin, Headlines, Office Buildings. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry