A recent report issued by CBRE Econometric Advisors had this interesting chart showing the distribution of distressed assets by property type:

getbinary.aspxAccording to their research, most of these assets are concentrated in the “CANVFLAZ” markets (California, Nevada, Florida, Arizona).  They are also reporting a sharp up-tick in the hotel and “development” sector – the latter being construction loans outstanding.  Retail remains a very large sector, and is anticipated to grow – common sense: if you have between 10-17% unemployment and that number is anticipated to stay constant through 2010, you are not going to have a consumer driven recovery anytime soon.  My guess is the “Development” category will grow too as owners burn through their interest reserve and cannot get restructured due to battered balance sheets.

Don’t know where the next Sam “Grave Dancer” Zell will come from, but some opportunities should start to emerge in the next couple of quarters.  Sense I get from my conversations with lenders and owners is the banks have been willing to extend loans out – probably in the hope that some form of Resolution Trust Corporation relief might emerge – but their patience is wearing thin and they know the sponsors are running out of gas.  Private capital is still sitting largely on the sidelines too – partially due to the sense that there’s more downward pressure on pricing coming to bear and no one likes to “catch the falling knife.”  Partly too, though, from the people I have been talking to, out of fear that the combination of massive Federal debt ($1.4 trillion deficit this year alone!!), so called health care reform legislation and cap and trade legislation will inevitably lead to higher taxation.  It’s not a comforting picture at this juncture.