Still a Tenant's Paradise
May 4, 2011

While 52 South Florida office and industrial properties have been assigned to a special servicer, those figures don’t tell the whole story, Studley senior managing director Chris Lovell tells us. That’s because there are 92 CMBS loan properties on the watchlist, which indicates that we'll likely see some rise in the total loan counts and volumes before we reach a stabilizing or decreasing trend.

We're in a real estate investment stage that's perplexing because we see reports of rising special servicing numbers and non-CMBS foreclosures while at the same time witnessing high-profile, trophy property sales, Chris says. We have to keep in mind that the much-praised sale of Las Olas Centre, for example, was the sale of a property foreclosed by Wachovia Bank and sold at $170M, some $50M below the value of its original loan.There are more than 200 loans in South Florida that are still faced with the need to renegotiate certain terms, and making it to the watchlist is often the first step to the negotiation process many owners utilize, Chris tells us. However, there seems to be an interest in Class-A South Florida properties and in select parcels of prime development land. Chris's good news, bad news: We will continue to see foreign capital enter this market and private equity funds continue to seek strategic investments, but we are still a few years away from any concept of stability.