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Commercial foreclosures are on the rise in Florida as borrowers continue to face significant challenges.

In September, the state saw 70 commercial foreclosures, up from 47 the previous year, with 538 foreclosures reported by late 2024. This marks a notable increase from the record-low figures seen in 2020, according to real estate data provider Attom.

The uptick in foreclosures is largely attributed to higher interest rates, which have increased monthly payments for many borrowers with adjustable-rate mortgages. Additionally, those with expiring low-rate loans are finding it difficult to refinance at current, higher rates. Development site owners are also struggling, as the combination of rising interest rates and elevated construction costs has made it challenging to move forward with projects as their land loan maturity dates approach.

Attom’s report highlights that while commercial foreclosures are rising nationwide, they have not yet reached the levels seen in previous years. In Florida, foreclosures peaked at over 880 in 2015.

 

Source:  OBJ

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South Florida has seen a surge in commercial foreclosure lawsuits this year, as the industry grapples with multiple challenges.

According to the Business Journal’s 2024 Biggest Foreclosures list, there were 25 commercial foreclosure lawsuits filed in the past 12 months, each involving at least $2 million. These cases, filed up until October 30, include only those that were not dismissed or settled. Additionally, four more lawsuits exceeding $2 million were filed but were too small to be included on the list. This marks a significant increase from the 2023 list, which featured just 17 lawsuits, with a smaller proportion seeking large sums. Last year, only one case exceeded $30 million, while this year, six cases have surpassed that threshold.

A key factor contributing to this rise is the ongoing impact of high interest rates. Many borrowers with adjustable-rate mortgages are facing increased payments, and refinancing loans at higher rates has become more difficult, particularly for those with low-rate loans set to expire. For property developers, the combination of high interest rates and rising construction costs has made it harder to move forward with projects, especially as the maturity dates of land loans approach. Financial troubles at some parent companies of loan sponsors have also added to the pressure.

In terms of property types, office buildings were the most common target for foreclosure lawsuits, making up eight of the top 25 cases. Development sites followed with seven lawsuits, while multifamily properties accounted for four.

Not every foreclosure lawsuit results in the loss of property. Of the top 25 lawsuits, only four have resulted in borrowers losing control of their properties. Many other cases have been resolved through settlements or dismissals, allowing the borrowers to retain ownership. These include cases involving Jade on Bay LLC for apartments in North Miami, West Boynton Auto Services for an automotive building, BWSR Real Estate and former Miami Dolphins player Brandon Marshall for an athletic club in Weston, Orengo Investments for apartments in Opa-Locka, and Boynton Partners for condos in Boynton Beach.

 

Source:  SFBJ

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The number of commercial foreclosures in the U.S. has steadily increased, from a low of 141 in May 2020 to 625 in March 2024, according to an updated report from ATTOM.

That represents a 6% increase from the prior month and a 117% increase from last year. The real estate data tracking firm also noted that California, New York, and Florida were the states with the most foreclosures.

New York had a total of 61 commercial foreclosures in March 2024, a 5% increase from the prior month and a 65% increase from a year ago. Florida saw increases of 30% and 107%, respectively. Texas saw increases of 31% and 129%, and New Jersey saw increases of 31% and 133%.

Foreclosure filings on commercial real estate property in California in January 2024 were triple the number of foreclosures in January 2023, according to ATTOM data. Banks in California have a great deal of exposure to commercial real estate with 31% of Golden State bank portfolios carrying three times larger loans than capital.

The recent increase in foreclosures follows a multi-year low of just 141 in May 2020, reflecting the immediate impacts of the pandemic and swift response measures like moratoriums and financial aid for owners.

“Despite challenges like the COVID-19 pandemic and evolving economic policies, the market demonstrated remarkable adaptability,” ATTOM reported. “Initial pandemic-related foreclosures were followed by a stabilization as businesses adjusted to new realities.”

 

Source:  GlobeSt.