Posted on 08/08/2023 8:30:17 AM PDT by Kaiser8408a
Its not a wonderful world for regional and small banks given the deterioration of office markets.
The latest data from Trepp, which tracks commercial mortgage-backed securities (CMBS) securities market data, shows the delinquency rate of commercial property loans packaged up by Wall Street jumped again in July, with four of the five major property segments posting increases.
“While the rest of the US economy has seen relief in terms of higher equity prices, better-than-expected corporate earnings, and falling inflation numbers, the commercial real estate (CRE) market continues to be left behind,” Trepp wrote in the report.
Trepp data found the delinquency rate rose 51 basis points to 4.41% last month — the highest level since December 2021. Office delinquencies increased by 46 basis points to 4.96% — up more than 350 basis points since the end of 2022. The deterioration in the office segment is intensifying at an alarmingly rapid pace.
A broad overview of the US CMBS market shows the delinquency rate increased to 4.41%, a 51bps rise compared to the previous month, but still significantly lower than the 10.34% rate recorded in July 2012. The rate peaked at 10.32% in June 2020 during the government-forced Covid lockdowns.
One major hurdle for CRE space is that “more than 50% of the $2.9 trillion in commercial mortgages will need to be renegotiated in the next 24 months when new lending rates are likely to be up by 350 to 450 basis points,” Lisa Shalett, chief investment officer for Morgan Stanley Wealth Management, wrote in a note to clients.
Shalett expects a “peak-to-trough CRE price decline of as much as 40%, worse than in the Great Financial Crisis.”
(Excerpt) Read more at confoundedinterest.net ...
Its not a wonderful world for regional and small banks given the deterioration of office markets.
There's a natural tendency to express at least a little schadenfreude when one hears of the banksters having trouble. But the banks that are really going to have problems are exactly the institutions that shore up local and independent businesses. It's not a good thing when there are only a half dozen giant banks all based in Manhattan.
I"m sure it's just an accident that it's the regional banks that are taking the hit, and the large national players that will profit.
You are on the right track. This is intentional destruction of middle America and mid tier banks. All to put the power in fewer and fewer hands.
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