Posted on 11/08/2009 5:59:28 PM PST by FromLori
Banks are in for another ugly year in 2010. But this time the problem will be the big batch of deteriorating commercial real estate loans on their books.. (Read our cover story about why this real estate bust is different.) Commercial real estate loans that banks underwrote and held on their books skyrocketed to approximately $190 billion in 2007, up from $11 billion in a single year, a decade earlier. In all, banks hold some $1.8 trillion of commercial real estate debt on their books.
Trouble is, nobody knows just what the values of the loans on bank books’ are since they are not required to mark them to market prices. Since the stress tests conducted by the Feds never looked far enough into the future, the ability to “fully grapple with the prospect of massive future commercial real estate (CRE) loan defaults is uncertain,” admitted Jon D. Greenlee, associate director at the Division of Banking Supervision and Regulation in congressional testimony on July 9 and again on Nov. 2.
Of particular concern, says Greenlee: Almost $500 billion of commercial real estate loans that will mature during each of the next few years. “In addition to losses caused by declining property cash flows and deteriorating conditions for construction loans, losses will also be boosted by the depreciating collateral value underlying those maturing loans. .
But surging delinquencies and defaults will eventually catch up with them. So who is most at risk? KBW Research, a boutique investment bank and research shop in New York, crunched the numbers. Here’s a look at some of the U.S. banks and thrifts they believe have the most commercial real estate exposure based on a percentage of their total loans (from 50% to 71%) as of the second quarter.
(Excerpt) Read more at businessweek.com ...
The banks’ nightmare is an investor’s dream. Not doomsday.
Unless, of course, we make it doomsday with a bailout. Nah, that won’t happen...... /s
Full Disclosure: IF that happens, it would be time for the military to start to think about staging a coup.
Letting a foreign enemy gain legal ownership of large swathes of the country is tantamount to treason.
Cheers!
Obama is talking about a second Stimulus. Anyone care to estimate a dollar figure? Anyone? Anyone? Bueller?
How so? After the building boom screeched to a halt a few years ago there are thousands of 'see through' buildings out there. Management companies are almost giving away office space. First year rent free. Rates at or below costs. Investors are losing millions. With our shrinking economy there aren't enough businesses to fill the overloaded market. It's not just the bankers that are losing on this one. Everyone loses. The latest estimates are that Atlanta has a twelve year supply of office space. And that's assuming the economy recovers.
Letting a foreign enemy gain legal ownership of large swathes of the country is tantamount to treason.
A military coup is treason. We will hang any officer that tries.
With the FED as counterparty on your short sales. It is a nightmare.
Food for thought.
Cheers!
Just what we need, another financial enema.
How is low rent/low cost not a dream for a buyer or renter? I should have clarified that is what I meant...someone who is investing in a building for themselves. Great opportunities there.
File this under "Keep your friends close ...."
No more stimuli. (That is a misleading word anyway). Let prices reach market by themselves and stay there. Everything is worth something. A building may not be worth the $100,000 someone paid for it, but it’s worth more than a dollar (unless it’s in Detroit).
They can buy all the real estate they want, it’s legal. Quite typically, foreigners are not adept real estate investors and frequently end up overpaying for assets. Remember the Japanese and Pebble Beach?
That wo uld be bad...
Good thing obummer is still sitting on 85% of the stimulus money then, isn’t it?
I’m sure he’ll use it to keep the banks healthy instead of funneling it into 2010 elections, right?
Oh, I had that in mind, all right. But I also remember Tiananmen Square; Chinese overpopulation and their shift from Communism to nationalistic fascism; and speeches such as this which I *hope* is tin-foil hat territory.
(Oh, and Bill Clinton's more-or-less sale of nuclear weapons technology and missile guidance technology to them in return for campaign contributions.)
Japan was an economic rival without a threatening military.
China is growing the offensive capabilities ominously -- and note that I said selling US land *to an enemy*...
Hasn't happened yet, thank God.
Cheers!
It depends on what we are talking about. Usually, commerical refers to office space. It’s not retail, residential or industrial. It’s great for renters. For owners ... why would you invest millions in a business (in this case building) that is losing money no matter how low the cost?
As far as a company buying a building for their own use, I can see that. However, most commercial businesses don’t like tying themselves to a property. If times are good they can outgrow the facility. If they shrink then they are paying for empty space unless they lease it out.
It’s a weird scenario in commerical real estate right now. Renters want to lock up long term deals at the present low rates. Landlords like the security of long term deals, building values are based on rent rates and lengths, but you don’t want to get stuck making less than the rest of the market when prices recover.
They have so many problems, demographic and otherwise that I’m not sure they’ll pose much long term threat to us. I do believe however that there may be African nations that all of a sudden find themselves facing a huge Chinese diaspora. The Chinese have a space problem and Kenya, Tanzania or the Congo wouldn’t be bad places to relocate.
You pretty well covered it, but I would say Atlanta has more than a twelve year supply. They probably have that many finished, empty, homes within 75 miles of Atlanta.
No member of the United States military is bound to obey an illegal order.
That is a far cry from overthrowing the United States Constitution. We will hang any who make such an attempt.
Just the wankers who commit treason by selling us out to an enemy...
(i.e. we are at war with China, direct or through proxies, and some high-ups decide to allow "in token of peace" 5 or six *million* Chinese citizens to buy contiguous swathes of land or buildings and settle here).
See my post #17 this thread.
Cheers!
Cheers!
I have no idea about residential.
If any of the United States military attempt a coup, we will hang them.
The water problem is severe but I think the solution to that is relocating population. Would Canada be a good candidate? I’d think somewhere in Africa probably; they could gain a foothold then take the area. Tanzania has 36M divided into several tribes. That’s less than 3% of the population in China; they could be quickly overwhelmed (and probably out-organized and out-worked).
Military coups do not always overthrow the constitutional order of the country in which they take place: Honduras provides a notable recent counterexample to the notion that they do.
I think those on FR who make noises in support of a hypothetical military coup in the United States always do so under the assumption that the coup would be necessary to restore the Constitution (again, cf. Honduras).
Very adroit turn of phrase.
I'm seeing a lot of that here on the coast-- from Butler Buildings ( steel-frame and sheet metal siding ) to condominium towers.
Down the road from us, there's a new office tower- been completed for a year or two... so far, it has one pharmacy and one vacuum cleaner store on the bottom floor...
With the conduits gone and the securities market for these severely down, there is not enough available credit capacity to refinance all of what is coming due.
A lot of money is going to be won and lost in this go round.
Thanks for reading between the lines on my none-too-coherent posting, David.
Cheers!
The US Constitution was already overthrown with the seating on an ineligible, non-citizen, Kenyan-born, communist, muslim terrorist supporting, usurper in the White Hut.
Let us know when you have finished hanging all the participants in this ongoing fraud, then we'll talk about how to handle any future hypothetical "coups".
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.