Secondary Market

Although terms of the deal were not disclosed, New York-based Trepp, LLC, an independent provider of commercial mortgage-backed securities (CMBS) and commercial mortgage information, confirmed Wednesday that it has agreed to acquire Foresight Analytics, LLC, an Oakland, California-based provider of real estate market consulting services.

The default rate on commercial real estate mortgages held by U.S. banks closed out 2009 more than double what it was a year earlier. Real Capital Analytics has reported that the default rate on loans made for office, retail, hotel, and industrial spaces shot up to 3.8 percent in the fourth quarter of last year, compared to 1.6 percent for the same period in 2008. Defaults on multifamily mortgages soared even higher - a staggering 250 percent - with the rate jumping from 1.8 percent to 4.4 percent.

To keep pace with rapid growth in its client base, National Creditors Connection, Inc. (NCCI) is expanding its sales force. The Lake Forest, California-based company just announced that it has promoted Justin Meece to East region director of sales. Upon his promotion, Mark Shapiro was added to the team as a new national account manager.

Encore Retail, LLC, a privately held real estate development firm and subsidiary of Dallas-based Encore Enterprises, Inc., recently announced the appointment of Michael Nelson as VP and director of leasing for the company. Nelson brings over 25 years' experience in retail, office, medical, and industrial assets to his new position.

Despite current reports of stabilization within the economy, commercial real estate sectors continue to be negatively impacted by fallout from the recession, but according to the National Association of Realtors (NAR), there is hope for some improvement by next year. Vacancy rates are expected to stay elevated throughout 2010, but NAR says with the job market anticipated to turn for the better later this year, the industry should see rising demand for office and warehouse space in 2011.

Prices of commercial properties in the United States rose 4.1 percent in December, Moody's Investors Service said Monday, further feeding the debate over whether the sector's unpredictable crash has passed or still lies in the cards. It was the largest month-to-month increase in the 10-year history of Moody's commercial index, and marked the second consecutive month of price gains reported by the credit ratings agency. On top of those positives, transaction volume rose more than 75 percent from the previous month.

Subprime is a word that's now ostracized within the industry, but the repercussions of the housing boom days when subprime loans were commonplace are still resounding. Heightened concerns about the valuation of subprime assets backing U.S. residential mortgage-backed securities (RMBS) has manifested in an across-the-board drop for all vintages, Fitch Solutions reported last week.

Last week came and went without the typical news of several FDIC-assisted bank closures, but the reprieve was short-lived. This weekend, regulators shut down four institutions - one each in California, Florida, Illinois, and Texas. These latest bring the number of failures on the FDIC's list to 20 for the year, and nearly all of the crashes have been linked in some way to bad mortgages or construction and development lending.

Cassidy Turley, a commercial real estate services firm, recently announced that Peter Ruggiero and Lisa Birrittieri have joined the company's capital markets investment services group. Ruggiero will serve as managing director of U.S. capital markets, and Birrittieri will assume the role of VP, U.S. capital markets for the firm.

Commercial real estate in the United States has suffered its worst annual capital return on record, according to Investment Property Databank (IPD). The global real estate analysis firm reported that its U.S. property index fell 23.9 percent in 2009. While the pace of market value decline eased over the final quarter, IPD says cap rate pressures and weakening rental fundamentals are curbing optimism that 2010 is the year of recovery for the commercial sector.