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From Kirsten Bischoff, Opalesque New York:

US Commercial real estate prices declined -2.6% in February, marking the first decline in four months. Additionally, in March, the Commercial Real Estate CDO delinquency index from Fitch Ratings showed that delinquencies rose to 12.8% (up from 12.5% in February). The commercial real estate market, which has been one of the last chips to fall in the financial crisis, may finally be showing the small stress fractures that indicate the big opportunities are close at hand.

“We’ve been saying this for a while, but when the floodgates open there will be a ton of product available in the commercial space,” Elton Wells, Head of Structured Products at SecondMarket, told Opalesque. “We’ve said that going back to the fall of last year, but we still haven’t seen it happen; banks are delaying the inevitable for as long as they can.”

Banks may finally be moving to push some of these assets off their books, and many hedge fund managers are patiently lying in wait. One example is Starwood Capital Group which has raised $2.8bn for two funds targeting distressed commercial real estate assets. With Fitch Ratings reporting that realized losses increased in March to $121.2m (within what is tracked by the agency) it expects more banks “will continue to do so at an accelerated ra......................

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