Monday, May 25, 2009

The Coming Tsunami in Commercial Real Estate...

Regular readers won't find this information startling -- Commercial Real Estate is struggling and there is a huge wave of loans coming due in the near term. This article highlights the pending problems....

"About $1.4 trillion in real estate debt is set to mature over the next four years, with some $204 billion coming due this year alone.

Most of that debt won't be able to be refinanced or restructured because lending standards have tightened and commercial real estate values have cratered since last year, according to Deutsche Bank analyst Richard Parkus.

However, this commercial real estate crisis, fueled primarily by developers and property investors getting easy access to relatively cheap loans, may be even worse than what's come before. That's especially the case since Average Joes and Janes are by extension huge landlords via pensions, endowments and mutual funds -- which have big commercial property exposure over the past few years. "

Keep that in mind the next time you hear about a massive building going belly-up in NYC, Boston, Vegas or Miami. That might be a part of your retirement going bust as well.


R. P. Reitz said...

I have just discovered your grindstone financial blog. You have some very good insights. I just wish to thank you for taking the time to post your observations and sharing your insights.

I came to this website because I was really looking to find out what a Bloomberg article meant when it said that 16 primary dealers (banks) are REQUIRED to bid on U.S. Treasuries. Didn't most of these banks get "bailout" money from the Fed or the Treasury Department? If so, then aren't they simply taking U.S. Govt bailout money and buying Treasuries with that money? How is that any different from the Fed simply printing money and putting it into the system? Isn't this just government money being used to buy treasuries...isn't it the same thing as the Fed printing more money and putting it into the system? I would like to know what your thoughts are on this matter. Am I naive? Did I miss something? Am I merely speaking out ignorance of the financial and monetary systems? - R. P. Reitz, a retired physicist and perhaps ignorant questioner.

Commercial Real Estate said...

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Hope this helps your Commercial Real Estate needs .

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