1st Service Solutions warned that the Las Vegas, Phoenix and Chicago markets could cause problems for commercial mortgage-backed securities investors.
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In the Chicago market, 27% of CMBS-financed properties have a loan-to-value ratio higher than 100% and 58% have an LTV higher than 80%.
Phoenix has 21% of CMBS-financed properties with an LTV higher than 100% and 53% higher than 80%.
Las Vegas has 28% of CMBS-financed properties with an LTV higher than 100% and 57% higher than 80%.
More than half of all CMBS loans are overleveraged in all three markets and the borrowers likely won't be able to pay off the notes at maturity, 1st Service said.
"The commercial real estate industry and especially borrowers with CMBS loans need to heed these warning signs," Ann Hambly, chief executive of 1st Service, said in a news release.
