NEW YORK – Commercial mortgage defaults will rise over the next two to three years, according to MetLife Inc.’s chief investment officer.
Steven Kandarian, speaking to Bloomberg Television today, said that “the worst is to come. … Typically there’s a lag between when the economy softens and when the defaults actually occur.”
Real Estate Econometrics LLC reported yesterday that the default rate on commercial mortgages held by U.S. banks may rise to 4.1 percent by year end as refinancing sources remain scarce and rents are affected negatively by the recession.
Kandarian noted that while MetLife would “have some issues,” its portfolio of loans was adequately capitalized to withstand a prolonged recession, based on the results of the recently concluded Federal Reserve’s stress test.
The recession is starting to take its toll on the local real estate scene as well, with a number of Providence Financial District buildings in receivership and vacancy rates rising.
MetLife Inc. (NYSE: MET) – the nation’s largest life insurer based on policies in force – is a provider of insurance and financial services to more than 70 million customers in the United States, Latin America, Europe and the Asia-Pacific region. Its Rhode Island-based MetLife Home & Auto division employs between 1,800 and 1,900 people at its offices in Warwick. Additional information is available at MetLife.com.
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