N.C. is high in 'troubled assets'

When it comes to snarled developments and debt-burdened landlords, North Carolina is up there -- No. 10, to be precise.

At least, that's according to a New York real-estate researcher tracking more than 6,357 planned developments and properties across the country.

Real Capital Analytics recently compiled the "Troubled Asset Radar," a massive list of stalled or canceled projects, over-leveraged landlords and property loans that are maturing amid a credit crunch.

A year ago, we knew that the plight of developers and landlords would dim as lenders twisted the tourniquet on the real-estate industry's lifeblood. But we couldn't put numbers to the hunch.

Real Capital tells us that, in North Carolina, 202 properties worth $5 billion were considered distressed. The state ranked seventh in stalled developments, with 85, and sixth in distressed retail properties.

The total was far behind the leader, California, which claimed almost one-seventh of all distressed properties.

But the Tar Heel state data are something of an eye-opener, especially considering that our economy has been deemed more resilient than others.

"This has been a positive place," says Ben Kilgore, a broker at CB Richard Ellis in Cary. "People have flocked to this part of the country. The in-migration into this marketplace has been huge, and if people come here, then developers and investors want to be here."

Yet it illustrates just how undiscriminating and far-reaching the lending crisis really is -- regardless of a region's promise.

The 71 distressed Triangle properties gave this region the edge over the state's No. 2 market, Charlotte, which had 62.

A closer look at how Real Capital defines distress may paint a brighter picture, to some.

"Troubled" assets are those that have been foreclosed or have mortgages in default. There were only seven of them in the state, including three in Charlotte. None was in the Triangle.

The Triangle led with 32 "potentially troubled" properties -- ones that may be perfectly healthy but are owned by companies that are in financial distress. Triangle properties owned by Centro Properties Group, for instance, loomed large. The Australian investor owns 650 U.S. retail centers, including North Raleigh's Wakefield Commons and a few others in the Triangle. But it has struggled to refinance $3.1 billion in debt for properties across the country.

Real Capital also tracked stalled or canceled developments, such as Waverly Place, the Cary project that was halted, and ultimately sold at a loss, after financing failed for a redevelopment. There were 84 of those in the state, almost half in the Triangle, indicating that many developers were too bullish, too slow or too far along to halt a project.

"That train's going to take a little while to stop," said Jim McMillan, a Grubb & Ellis/Thomas Linderman Graham broker. "People bit off a little more than they could chew."

To property owners, the Troubled Asset Radar could be a grim indicator of things to come. Property values will sink if an owner who can't refinance debt needs to unload properties at fire-sale prices. General Growth, the Chicago-based owner of The Streets at Southpoint in Durham, is tip-toeing toward that scenario in other parts of the country.

But buyers, particularly those on the sidelines with pockets full of patient cash, are no doubt licking their lips at the value menu.