Capmark Financial Group’s possible collapse may signal a new wave of real estate losses for banks -- this one tied to business property -- that could push the year’s tally of failures past 100.
Capmark, ranked among the largest US commercial real estate lenders by Moody’s Investors Service, posted a $1.6bn quarterly loss on 2 Sept and said it might go bankrupt. The Horsham, Pennsylvania-based company struggled as the default rate on commercial mortgages held by U.S. banks more than doubled to the highest since 1994.
'We haven’t really experienced the full extent of the distress,' said Sam Chandan, chief economist at property research firm Real Estate Econometrics LLC in New York. 'When you look at community banks and some smaller regional banks, they tend to have a far greater concentration in terms of their exposure to commercial real estate.'