The number of bank closures this year continues to grow at an alarmly rate as the fallout of the recession taking heavy toll on local financial institutions. Record banks failure in the first half of 2009. FDIC is rumored to be running short on liquidity/cash to cover so many bailouts.
Many of these regional banks have invested heavily in the commercial real estate market with much higher rates of return ( riskier of course ) during the boom times. Other big players in this CRE market also include insurance companies, private equity, and REITS.
After three years of steep slump beginning with residential mortgage, then now commercial mortgages are the next monsters to crash with many regional banks holding the (empty) bag.
Steady flow of trophy properties in default are being paraded out :
* The St. Regis Monarch Beach hotel, an Orange County luxury resort in Dana Point
* The Four Seasons Hotel in San Francisco.
* The Stanford Court Hotel, also in San Francisco.
* Sunstone Hotel Investors's 366-room Embassy Suites Chicago,
* 284-room Marriott Del Mar in San Diego, or the 299-room Ontario Airport Marriott.
* The 469-room Marriott in downtown L.A.
* The W hotel in San Diego.
At the moment most CRE lenders have been reluctant to realize/recognize these losses on their book yet, praying for some kind of recovery in consumer spendings, and probably more help from Obama administration.
The dearth of CRE activities :
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