5:35 am October 19, 2009, by Henry Unger
The second shoe is about to drop on some Georgia banks.
Many Georgia banks face a growing danger — a deteriorating market for shopping centers, office buildings and other commercial property, AJC reporter Paul Donsky writes.
This comes on top of the bad residential real estate market that got them into trouble in the first place.
For months, Donsky writes, experts have said a wave of commercial real estate problems is on the way. Retail and office vacancies are rising, and remaining tenants are demanding lower rents. As a result, rental income is dropping and the value of properties is falling, making it difficult for borrowers to make loan payments and refinance loans when they come due.
“Loans are not worth as much now,” said Henry Lorber, an Atlanta consultant who advises banks on how to deal with troubled real estate loans. “All hell is going to break loose, because [borrowers] cannot refinance those loans.”
Still, Donsky points out, most of Georgia’s 300 small, community-based banks have relatively light exposure to these kinds of loans, allowing them to watch the coming crisis from the sidelines.
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