WSJ: Commercial Property Investors Seek Bailout
Started by dwell
over 17 years ago
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Member since: Jul 2008
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Commercial real estate aka REITS will probably follow the financials performance in 2009. In 2008 alot of financials went near 0, or got nationalized in single digits....
likely so will commercial real estate companies. most likely just go bankrupt as they are not systemic to our system...
names i can think of that may have trouble in 2009 are NY's Vornado group, CB Richard Ellis, and Boston Properties. I can't imagine these make it through 2009 without major gov't support, but i'm not sure the gov't will step in on these. The line has to be cut somewhere...
similar stuff:
http://ny.therealdeal.com/articles/development-in-distress
Development in distress
"Meanwhile, buyers have grown wary of purchasing new condos, fearing that prices will fall before closing, or that new developments won't get finished."
"names i can think of that may have trouble in 2009 are NY's Vornado group, CB Richard Ellis, and Boston Properties...........but i'm not sure the gov't will step in on these. The line has to be cut somewhere..."
Agreed.
REITS are screwed... don't think anybody will be helping them.
"likely so will commercial real estate companies. most likely just go bankrupt as they are not systemic to our system..."
question is... what is the potential impact on the banks? Could it be cheaper to prop up the REITs than to give even more to the banks to make up for the losses?
"question is... what is the potential impact on the banks? Could it be cheaper to prop up the REITs than to give even more to the banks to make up for the losses?"
Ding ding ding. Most commercial buildings were way overvalued and were financed with the expectation of astronomically increasing rents & little equity. Just wait until banks have to repo them from these failed REITs and then try and sell into a flooded and down market. Gigantic losses are coming.
Look, you made a choice to make an investment, it was a bad investment, you have to pay.
Not me.
The banks can take over the properties - wouldn't be the first time.
The problem is what happens to them financially if they have to do that.... clearly thats cash not going to their reserves, and that could cause more issues...