Archive for the ‘Distressed Real Estate’ Category

       Limited Demand For Land       

With the current glut of vacant and for lease properties in Las Vegas, the demand for land to build is almost non existant.  This is a far cry from the land grab era just a few yearrs ago when a wealthy New York-based company controlled by Israeli billionaire Yitzhak Tshuva paid $1.24 billion, roughly $36 million an acre, for the New Frontier in 2007.  That land today is worth a fraction of that if you were able to find a buyer at all.

Smaller parcels that were purchased by private groups for development or investment purposes before the "Great Recession" have gone back to the bank. About half of commercial mortgage defaults in Las Vegas last year were for vacant land.

It is reported by Allkied Analysis that prices for raw, undeveloped, land in Las Vegas have fallen 74 percent from their peak of $939,357 an acre in fourth quarter 2007, That means that excluding the resort corridor, the average price dropped to $243,368 an acre, or $5.58 a square foot.  Sales, if there are any, are mostly distressed or trustee deed transfers with lenders.

With nearly 28 million square feet of vacant commercial space and still a very large excess inventory of foreclosed homes in Las Vegas, I would guess any investor looking to acquire land on speculation would have to account for at least a three to five year hold. 

  The most delinquent securitized commercial property loans are in New York at $2.2B followed by Phoenix, Los Angeles and Las Vegas.  These properties are among thousands across the U.S. facing foreclosure due to job losses, lack of refinance credit, vacancies and rent rollbacks. 

   In order to make any change to an existing commercial loan in default as a mortgage backed security (MBS), you need to be working with the “Special Servicer”.  A commercial loan may be handled by a “Special Servicer” when the loan is considered delinquent, at least 30 days past due, classified as a non performing loan or in foreclosure.

  “Special Servicing is when the management of the loan is transferred from the “Master Servicer” to a “Special Servicer”.  This can occur when the borrower has defaulted or is deemed likely to be unable to fix the issue within a reasonable time.  The loan may be placed on a “Watch List” by the Master Servicer if the servicer has a cause for concern on the loan but it is still considered a performing asset.