The Heron Tower, at 110 Bishopsgate, London, is due to be completed by 2011.

The value of UK commercial property loans in breach of their agreed terms more than trebled in six months according to a report to be published today.

More than £76bn of  commercial property  debt of almost £208bn, has to be refinanced before the end of 2010.

The UK commercial property market is suffering its worst slump on record and won’t recover until 2011 according to a  report by the Royal Institution of Chartered Surveyors (RICS), published last week. Price correction from market top to bottom of 50% was forecast. Also last week, property research company reported that UK commercial property returns for 2008 look set to surpass the landmark losses recorded in 1990, on a real returns basis, with total returns now at -18.2% over the 11 months to November 2008, compared to an inflation-adjusted return of -16.2% almost 18 years ago on a UK Annual Index. The largest ever annual total returns loss for UK commercial property, on a real return basis, was -29.4% recorded back in 1974. (see links to reports below).

Leicester Business School, De Montfort University undertakes twice yearly surveys on the UK commercial property lending market, which are are sponsored by 15 organisations including the Bank of England and the Financial Times reports today that the value of total debt secured by commercial property rose slightly to £207.9bn in the six months to July 2008, according to the latest survey - - the smallest half-year increase ever recorded by the survey at 3%. About three-quarters of new loans were undertaken by just 12 organisations.

The FT says the value of loans in breach of financial covenant was about 3.3% of the total loan book by the end of June – almost £7bn when applied to total debt – and more than treble that reported at the end of 2007.

Irish Nationwide Building Society has a loan exposure to UK commercial property of about €4.5 billion. Irish investors have been among the biggest foreign buyers of London commercial property in recent years.

In related news, John Cantwell and Ciaran Callaghan analysts at of stockbrokers NCB said in a note published yesterday that the High Court-approved settlement in the Ocean Bar examinership case was a blow to the banks because it could cut the amount they can recover against secured loans in such cases.

Using the banks' own data, the analysts assume that 15% of construction and property loans are at risk, and that examinership could be used in 10%of insolvency cases.

In that scenario, they calculate that the subsequent reduction in security for the three most affected banks would come to €447 million for Anglo Irish Bank, €415 million for Allied Irish Banks and €263 million for Bank of Ireland - a total of €1.125 billion.

In the Ocean Bar case, the pub's owner, Birchport, owed ACCBank €1.37 million, which was secured against the lease on the property. This figure was cut to €950,000, repayable over 15 years. The balance will be treated as unsecured debt, and the bank will recover 10% of this figure.

The New York Times reports today that a New York research company, Real Capital Analytics, has compiled data showing that at least $107 billion worth of income-producing property — including hotels, offices, apartment complexes and warehouses — is already in distress or is headed in that direction.

The distress is occurring all across the country, but New York tops the list because of the number of costly high-profile transactions that occurred during the boom years. Real Capital Analytics’ list includes a total of 268 properties in the New York area, with a value of $12 billion, as already or potentially in trouble.

 “The trouble that’s emerged is bigger than most of us expected,” Robert M. White Jr., the president of Real Capital Analytics, said in an interview in his Manhattan office, “and the size of the problem that is potentially out there is much greater than we thought we would be able to quantify at this point.” Many of these difficulties have surfaced just since mid-September, when the financial world suffered a series of jolts, including the collapse of Lehman Brothers, he said.