Sources Tell Me Some Messed Up Stuff Is Happening in Commercial Real Estate
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Sources Tell Me Some Messed Up Stuff Is Happening in Commercial Real Estate
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Re: Sources Tell Me Some Messed Up Stuff Is Happening in Commercial Real Estate
#2Sounds like the only actual bad stuff is the (hypothesized future) fat government bail-outs of the idiot banks - which allowed "just give us back the keys and you can walk away" clauses in a bunch of big-money contracts.
Obvious (if politically impossible) fix - banks that go bust become U.S. Gov't. property. Bank executives are fired as unneeded/incompetent, and their stock options become worthless paper. U.S. DoJ gets nasty about clawing back recent executive bonuses, compensation, and such.
Re: Sources Tell Me Some Messed Up Stuff Is Happening in Commercial Real Estate
#3Seems plausible. Vacancy rates of commercial property is ~~down~~ up significantly in major cities (SF, ATX, NYC, SEA, ...).
What I want to know is: is it possible to find out how many of these commercial loans contain a "non-recourse" clause?
Re: Sources Tell Me Some Messed Up Stuff Is Happening in Commercial Real Estate
#4Seems plausible. Vacancy rates of commercial property is ~~down~~ up significantly in major cities (SF, ATX, NYC, SEA, ...). What I want to know is: is it possible to find out how many of these commercial loans contain a "non-recourse" clause?
Not sure if UCC filings have this information in them, but that's one place I'd look first.
Re: Sources Tell Me Some Messed Up Stuff Is Happening in Commercial Real Estate
#5Seems plausible. Vacancy rates of commercial property is ~~down~~ up significantly in major cities (SF, ATX, NYC, SEA, ...). What I want to know is: is it possible to find out how many of these commercial loans contain a "non-recourse" clause?
Not sure if UCC filings have this information in them, but that's one place I'd look first.
I can say from experience, that when there is money to be made, or commercial advantage to be had, some group will be on it before any news or any report shows it. On the other hand, when there are losses, and big mouths on big mics are trying to make a public case, you better find a team and make sure you know where you stand, because it is not going to be fair, or pretty.
definitely interested in this topic for practical reasons here in California
Re: Sources Tell Me Some Messed Up Stuff Is Happening in Commercial Real Estate
#6I don't know that I agree with the author's assessment that this is "disgusting"; it just seems like a shift in wealth from bankers to commercial real estate companies, and I am not particularly sympathetic to either. Maybe there is another angle here.
Re: Sources Tell Me Some Messed Up Stuff Is Happening in Commercial Real Estate
#7Fits the pattern of recent major-developer default-walkaways in San Francisco:
- Westfield Mall: https://twitter.com/rolandlisf/status/1668356986256375808
- 2 major downtown hotels: https://sfstandard.com/business/real-estate-group-halts-loan... (with more likely to follow)
Re: Sources Tell Me Some Messed Up Stuff Is Happening in Commercial Real Estate
#8I don't know that I agree with the author's assessment that this is "disgusting"; it just seems like a shift in wealth from bankers to commercial real estate companies, and I am not particularly sympathetic to either. Maybe there is another angle here.
I also came here to comment on that word choice. It's disgusting to activate a clause of a contract that both parties agreed to, when neither party seems to have a substantial power imbalance relative to the other? Seems pretty odd to me.
Re: Sources Tell Me Some Messed Up Stuff Is Happening in Commercial Real Estate
#9I wouldnt be surprised if it turned out to be bigger than 2008 by some order of magnitude. But has the market priced this in yet? Are there financial instruments that you can monitor to see what big players might be thinking?
Im also not really optimistic anyone will stay angry enough for anything to happen. The news cycle burns so hot right now that people seem to be OK with paying almost double for food and still people are like “ooh but theres so much content”.
Re: Sources Tell Me Some Messed Up Stuff Is Happening in Commercial Real Estate
#10I'm not sure if it is the case in the US but in the UK we have similar issues around commercial real estate and there is a problem - a lot of pension funds are invested in them. If they don't recover in value then it will create a shortfall in future pensions which would be a bigger issue.