Credit crunch hits U.S. commercial real estate: Moody's

NEW YORK (Reuters) - U.S. commercial real estate values fell 1.2 percent in September as the credit crunch took a toll, and more declines could be in store, Moody's Investors Service said on Monday.

September's drop is based on the first full month of data since the credit crunch picked up steam in August and could mark a turning point in the once strong commercial real estate market, Moody's said in a report.

Moody's monthly commercial property price index is based on repeat sales of the same assets at different times.

"Over the next few months, we might see more ups-and-downs in the index -- with the downs exceeding the ups on a net basis -- in contrast to the rather steady upward march of prices represented over the last year or so," Moody's said.

The number of transactions also dipped 20 percent in September and by 30 percent from a peak in June, Moody's said.

For the third quarter, commercial real estate prices increased 0.9 percent, but office prices dropped 0.5 percent and apartments by 1 percent, Moody's said.

Industrial prices rose 3 percent in the third quarter, while retail prices were up 2.6 percent.

In a separate report last month, Moody's said it did not expect commercial real estate delinquencies to rise anywhere near the jumps seen in the early 1990s or those seen currently in subprime residential mortgages.

Commercial borrowers are more sophisticated than residential borrowers and therefore less likely to be surprised by rising loan terms and payments, while the generally strong commercial property market is also a mitigating factor, Moody's said.

(Reporting by Dena Aubin; Editing by Tom Hals)