Commercial property defaults double
Dec 04, 2009
Print this article
A de Montfort University survey shows that around £30bn worth of commerical property in the UK is in default or in breach of key lending agreements. That is more than double the figure at the end of 2008 and puts more pressure on the banks.
Falling commercial property prices have meant that thousands of owners can't service the debt repayments and they have gone into default.
Banks have also extended or refinanced an extra £16bn in the first half of 2009. This maturing debt is being rolled over because it can't be paid back by cash-strapped borrowers or the loans are restructured in order to prevent a breach of the covenants.
Royal Bank of Scotland and HBoS, now part of Lloyds Banking Corporation, are particularly exposed to this market.
There are £43bn of loans due to mature this year and £32bn due for repayment in each of the next two years. Many of these loans are likely to be rolled over.
The value of outstanding debt secured on UK commercial property was reported at £224.1bn at the end of the first half of 2009, down from the record £225.5bn recorded at the end of 2008.
Related articles
-
Mar 19, 2010
-
Mar 19, 2010
-
Mar 19, 2010
-
Mar 19, 2010
FREE - MoneyWeek's daily investment email
Our free daily email, Money Morning, is an informative and enjoyable analysis of what's going on in the markets. Written by our Editor, John Stepek, and guest contributors.
Sign up FREE to Money Morning here.
