A Miami-based LLC headed by Drew Kristol, a senior associate at Marcus & Millichap, has bought the Bahia Beach Hotel at 3030 Harbor Drive in Fort Lauderdale for $2 million in a short sale, the South Florida Business Journal reported. Fort Lauderdale-based Landmark Bank filed a foreclosure lawsuit against former owner Satyan Beach Properties and its managing member Prakash Mukhi in April. The hotel last changed hands in 2002 for $2.7 million, the Journal said. [SFBJ] [more]

Commercial loans are defaulting at record-high rates, and many industry insiders believe the pace will only worsen, both in South Florida and nationwide. As revenues drop amid a severe recession, savvy commercial property owners in the region are working with banks — some more than others — to avoid default now before market conditions worsen.

According to a recent report from Real Estate Econometrics, the default rate of commercial real estate bank loans has reached its highest level in 15 years. And momentum is moving toward worsening default rates, which more than doubled nationally in the second quarter, up to 2.88 percent from 1.18 percent year-over-year, the report shows. And the company expects the default rate to rise to 4.1 percent by the end of the year, and to 5.2 percent by the end of 2010.

Rising vacancy rates, falling rents and increased operating expenses are contributing to the default surge. But the inability to refinance, sell or meet balloon payments also plays a part. Legal experts suggest commercial property owners looking to avoid default should get honest and aggressive about trying to find a middle ground.
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Defaults on commercial real estate loans are at a 15-year high. Property values are declining. The commercial mortgage-backed securities market is flailing. And the worst may be yet to come. Credit remains all but frozen. Some lenders are looking to diversify away from commercial real estate while others are only lending to borrowers with whom they have existing relationships — when they lend at all. And the price of capital has soared. Meanwhile, the market is yearning for a new lending instrument to replace the bundles of loans that were securitized, divided, and ultimately proved impossible to value as the market collapsed. This time last year, commercial lending experts were predicting new instruments would emerge to fill the gap. But a year after the Lehman Brothers bankruptcy, memories of toxic investment vehicles remain and experts are mixed on what happens next. [more]