Commercial foreclosure rate triples this year

By Andrew Tangel, The Star-Ledger

Commercial foreclosures soared in New Jersey in the second quarter, with lenders and loan servicers going to court to take back 413 income-producing properties – nearly three times the number of such filings during the same period last year.

About half of the state’s commercial foreclosures in the second quarter came in June, according to records provided by the state judiciary.

The increasing commercial foreclosures is another sign of how the recession is rippling into commercial real estate, the sector that includes office buildings, shopping centers, industrial sites and apartments.

Much like the earlier crisis in residential real estate, commercial-mortgage borrowers – facing steep declines in revenue or rental income – stop making payments. In turn, lenders and loan services are asking courts to give them back the assets, such as the former headquarters of Linens ‘n Things Inc. in Clifton.

The now-defunct big-box retailer had its main offices in a complex on Brighton Road, which it rented from Daibes Enterprises. After the liquidated company stopped paying rent earlier this year, Daibes Enterprises stopped making payments on the $15.2 million mortgage on the property in March, according to the foreclosure complaint filed April 22.

Fred Daibes, the Bergen County developer who is chairman of Daibes Enterprises, said his company stands to lose the equity it put into the building, whose main tenant was the retailer, which sub-leased some space to smaller firms.

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