According to an article in the Dallas Morning News, more than 250 Dallas-Fort Worth area commercial and investment properties are facing foreclosure in October. The properties have more than $400 million in debt attached to them and included in the foreclosure filings are several large developments.
The article said:
"The just-completed Two Addison Circle office building on the Dallas North Tollway is scheduled for foreclosure action by lender Wachovia Bank. Wachovia lent developer Opus West LP - which is in bankruptcy - $40 million on the project. And Amegy Bank has scheduled an Oct. 6 foreclosure for a 55-unit Highland Park apartment complex at 4201 Lomo Alto Drive. Built in 2000, the luxury rental complex is owned by an Austin investor, Highland Park Residences LP, that borrowed $17.3 million on the property when it was purchased in 2004, according to the foreclosure filing."
The increase in commercial real estate foreclosures is the materialization of one of the industry's worse fears. As the credit markets have contracted many commercial real estate companies have been unable to secure the financing necessary to complete developments and existing properties have been unable to secure tenants and income necessary to fund loans. As retailers file bankruptcy and close poorly performing stores, many commercial real estate buildings are losing tenants and are being forced to offer bargain-priced leases to existing tenants. Even commercial real estate companies that have a history of doing well and a solid balance sheet are facing bankruptcy because creditors are cautious about lending.