I was going to set aside the subject of commercial real estate for now, but it just so happens that Kevin Hall at McClatchy has penned a superb overview of the potential problems in this area in Next Economic Crisis Looms: Commercial Real Estate Defaults. (Hat tip, Deal Junkie)
Rather than providing some snippets from the McClatchy piece, I recommend that readers click through to read the entire article.
Another good overview of the CRE issues was written by Daniel Geiger in Real Estate Weekly last week:
ReplyDeleteDeutsche Bank report estimates wave of foreclosures over the next decade
Hi Bill,
ReplyDeleteThanks for posting informative entries as always. I wonder if Washington has decided, I mean they literally seem to have taken oaths to do whatever it takes to save the real estate market and financial companies, what catalyst can cause this house of cards (we all know it is house of cards) to fall? WHat $410 billion over 10 years anyway? One more TARP?
The mark-to-market rule change gives these lenders to hide their balance sheets and they can go on repeating what they did earlier in the near future..they may not go that crazy but companies like BEE etc. don't have to worry about filing chapter 11 anymore like GGP did.. Uncle Sam has got everyone's back now....I sometimes wonder since many are expecting the collapse in commercial REITs , it just may not happen?
Also, one big difference this time vs in 1990 is China.. They can scoop up some assets if the assets are marked down too low too long? I would pay attention to the sentiment, as soon as sentiment improves, fundamentals wont matter and everyone will be back on the bull market train.... Only time will tell whats gonna happen.. comments?
ReplyDeleteGood point about China, which may soon take up a role in CRE that is similar to what Japan did two decades ago.
ReplyDeleteWith respect to TARP and similar plans, today the TALF loan terms for CMBS was extended from 3 years to 5 years. For more background on the TALF 3-5 year window and related issues, try
this link.
Cheers,
-Bill
his blog have been helped me a lot to realize more things regarding the tax related issues which is very much interesting.
ReplyDeleteCRE mortgages need loan modifications too! Check out http://mortgageaudit.com for CRE mortgage audits and analysis. SFF provides free document reviews, negotiation, new and refinancing services. The audit/analysis can be used for BK plans as well as loan modifications. They are also looking for affiliates.
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