Property funds the source of bad debt strain 14 February 2008 5:55PM Ian Rogers and John Kavanagh At a time when property developers and property fund managers are looking shaky the Commonwealth Bank has revealed a surprisingly sharp rise in its exposure to the sector. The bank's exposure to the property sector increased from 6.0 per cent of aggregate lending in June last year to 6.9 per cent in December. One of those exposures is to Centro Properties Group, which is struggling to refinance its debt. Centro owes the CBA $160 million.CBA chief executive Ralph Norris said Centro's bankers would be clarifying their position in relation to the group by the end of the week.The bank's chief financial officer David Crag said: "Australian corporates have been feeling the pain a little. We have increased our provisions in that area and we are comfortable that we are well provisioned."Commonwealth's indicators on asset quality are thus looking worse this half than in a long time.The expense for impaired loans increased to 0.20 per cent of average loans, up from 0.16 per cent in June 2007 and 0.13 per cent in December 2006. The bank said impaired assets were $562 million, a rise of one third in six months. In the consumer lending book asset quality has improved. One indicator, the level of housing loans 90 days or more overdue, fell 11 per cent to $176 million.