Area vacancies threat to loans

Metro Atlanta’s already shaky commercial real estate market appears to be in worse shape than feared, leaving a number of banks exposed to potentially sizable losses, according to a analyst’s report released Thursday .

Jennifer Demba, an analyst with SunTrust Robinson Humphrey in Atlanta, warned of “significant and growing vacancies” at properties throughout Atlanta, particularly in outlying suburban areas such as Alpharetta and Cumming.

Vacancy rates are a key indicator of commercial real estate loan quality. When commercial properties such as shopping strips lose tenants, revenues fall —- making it tougher for owners to pay off their loans.

Atlanta’s retail vacancy rate at the end of the first quarter was 9.9 percent —- the nation’s sixth-highest rate —- up nearly a percentage point from the fourth quarter, the report said, citing figures from CoStar. Nationwide, the vacancy rate was 7.2 percent.

Banks with exposure to the Atlanta commercial real estate market include regional players such as BB&T, Regions and Synovus, as well as Georgia-based community banks such as United Community and Fidelity, the report said. Demba is prohibited from commenting on her employer, SunTrust.

In an interview, Demba said her pessimistic outlook was drawn from those numbers as well as anecdotal evidence gathered from driving around metro Atlanta, where vacant storefronts are easy to spot.

“It’s everywhere —- in town, out of town,” she said. “But it’s particularly stark when you drive out of town, 10 to 15 miles out of downtown.”

While many Georgia banks have suffered huge losses in recent months tied to bad bets on the residential real estate market, problem loans tied to commercial real estate have been relatively limited.

At the end of the fourth quarter, Georgia-based banks reported that 2.8 percent of commercial real estate loans were past due or nonperforming, compared to 13 percent of residential construction loans, said Chris Marinac, an analyst with Atlanta-based FIG Partners.

Marinac said the commercial real estate problem could peak in 2010 and 2011.