Continue reading Office Vacancy Rate Still Rising

Office Vacancy Rate Still Rising originally appeared on BloggingStocks on Tue, 06 Jul 2010 16:00:00 EST. Please see our terms for use of feeds.

Continue reading Bank Failures Hit 42, Expected to Exceed 2009's 140

Bank Failures Hit 42, Expected to Exceed 2009's 140 originally appeared on BloggingStocks on Mon, 12 Apr 2010 09:00:00 EST. Please see our terms for use of feeds.

Continue reading What Signals from General Growth Battle?

What Signals from General Growth Battle? originally appeared on BloggingStocks on Fri, 26 Feb 2010 15:00:00 EST. Please see our terms for use of feeds.

The FDIC said this week that it expects distressed loans tied to mortgages and commercial real estate failures to result in many more bank failures this year. Last year 140 U.S. banks failed, the highest annual level since 1992. The FDIC has said the total bill for bank failures for the period of 2009 through 2013 could reach $100 billion.

Five more banks were seized by regulators on Friday, bringing this year's total to nine. The five failed banks are:

Continue reading Ongoing Bank Failures Tied to Commercial Real Estate

Ongoing Bank Failures Tied to Commercial Real Estate originally appeared on BloggingStocks on Sun, 24 Jan 2010 10:10:00 EST. Please see our terms for use of feeds.

A decline in revenues is forcing hotels into foreclosure. The aggressive deals being used to lure guests onto a property is helping to bring in some revenue, but it may not be enough. Occupancy is down 10%, which has sent hotel mortgages into delinquency faster than the rest of the commercial real estate industry.

And it could get worse next year. An oversupply of guestrooms could keep room rates low, making 2010 a high-risk year for hotel foreclosures. Demand should gain 1.6%, according to hotel research firm STR Global, but average room rates are likely to fall 3.4%. The result would be the greatest spread between demand and rates in the 20 years STR Global has been collecting data.

Continue reading Hotel mortgage delinquencies up five times

Hotel mortgage delinquencies up five times originally appeared on BloggingStocks on Mon, 30 Nov 2009 09:00:00 EST. Please see our terms for use of feeds.

Investment-grade commercial real estate prices gained 4.4% in the third quarter of this year. But, it's hard to tell if -- like brief blips of hope we've seen in consumer spending, unemployment and even luxury meals in London -- this is a change in the market or just a tease.

This increase in the MIT Center for Real Estate's transaction-based index (TBI) is the first up-tick in more than a year and the biggest gain since the middle of 2007. One quarter doesn't make a trend, cautions David Geltner, director of research at the MIT Center for Real Estate, but he says, "this is the strongest sign of a bottom that we've had in two years." The TBI reached 36.5% below its 2007 peak last quarter, up from 39% from the high-water mark in mid-2007.

Continue reading Commercial real estate comeback

Commercial real estate comeback originally appeared on BloggingStocks on Tue, 03 Nov 2009 15:40:00 EST. Please see our terms for use of feeds.

Continue reading Loopnet fights the commercial real estate depression

Loopnet fights the commercial real estate depression originally appeared on BloggingStocks on Thu, 29 Oct 2009 15:10:00 EST. Please see our terms for use of feeds.

You are probably thinking that such an event could not occur. Well think again. There is a report that says that we may be in for another crisis.

The report was initiated by Federal Reserve analyst, K.C. Conway. Conway is a senior real estate analyst at the Federal Reserve Bank of Atlanta. The Federal Reserve has acknowledged the report but said that it is not part of its formal opinion. What does the report say?

Continue reading Banks fail to absorb commercial real estate loan losses

Banks fail to absorb commercial real estate loan losses originally appeared on BloggingStocks on Thu, 08 Oct 2009 13:40:00 EST. Please see our terms for use of feeds.

This is not an abstraction: buildings large and small are showing gaping vacancies. Storefronts are empty. Entire buildings sit waiting to be occupied. In Manhattan, retail vacancies have reached their highest rates since 2001. For the second quarter of this year, vacancies hit the absurd height of 12.4%, thanks to unemployment trends that won't quit and consumers reluctant to pry open their wallets.

Retailers are being hit just like the residential market.

Continue reading Commercial real estate vacancies surge above 12% in Manhattan

Commercial real estate vacancies surge above 12% in Manhattan originally appeared on BloggingStocks on Fri, 17 Jul 2009 13:40:00 EST. Please see our terms for use of feeds.

After a nifty rebound off a 52-week low of $5.73, industrial and financial services giant General Electric (NYSE: GE) is in a weird place. The company's shares are trading at around $11.75, which is well below the $15 levels achieved in early May. This would seem odd as GE appears to be well positioned for the Green Shoots Scenario. The company has a big presence in alternative energy, health care solutions, and industrial products -- all big beneficiaries of both the Obama stimulus package and a nascent economic rebound.

So why does the market seem to be scared of GE? A couple of key reasons. First, GE's investments in commercial real estate (CRE) are looking increasingly toxic as the rate of CRE failures soars and CRE debt remains difficult to roll over.

Continue reading General Electric: Up, down or sideways?

General Electric: Up, down or sideways? originally appeared on BloggingStocks on Thu, 02 Jul 2009 14:45:00 EST. Please see our terms for use of feeds.

Listen to what Richard Parkus of Deutsche Bank has to say about commercial real estate. He said that "We are not only not approaching stability, we are at a period of maximum deterioration."

We have often said that after the collapse of residential real estate in the last year, the next shoe to drop would be the commercial market. What is being wrung out of the home market is now beginning to be felt big time in commercial real estate. Landlords are putting together all kinds of packages, including free rent and other perks, and still prices are falling. It is believed that values are down a whopping 50% from their peak in 2007.

Continue reading Commercial real estate market sinks

Commercial real estate market sinks originally appeared on BloggingStocks on Tue, 23 Jun 2009 11:00:00 EST. Please see our terms for use of feeds.

Continue reading Developers Diversified (DDR) deal signals pain level for undercapitalized REITs

Developers Diversified (DDR) deal signals pain level for undercapitalized REITs originally appeared on BloggingStocks on Tue, 09 Jun 2009 13:50:00 EST. Please see our terms for use of feeds.

George Soros is one of the truly legendary figures in world finance. He doesn't use fancy mathematics and he doesn't follow the crowd. In 2007 he predicted the coming collapse of the world financial system. Unlike other pundits, Soros has the courage to make huge bets, often using his "feelings" about what he sees is happening.

Continue reading George Soros says commercial property values to decline 30%

George Soros says commercial property values to decline 30% originally appeared on BloggingStocks on Tue, 31 Mar 2009 10:50:00 EST. Please see our terms for use of feeds.

Continue reading Circuit City Elementary School?

Circuit City Elementary School? originally appeared on BloggingStocks on Thu, 05 Feb 2009 15:18:00 EST. Please see our terms for use of feeds.

Trade groups representing developers and commercial lenders are lobbying Congress for a bailout. They are saying that $530 billion dollars of CMS's (commercial mortgage backed securities) are coming due in three years and $160 billion dollars are coming due next year.

The kinds of buildings involved include office complexes, hotels, shopping centers and other commercial buildings. Much like home mortgages, these CMS's were bundled together and sold to third parties and just as the market for home mortgages collapsed, so too this market's refinancing has all but come to a standstill.

Delinquency rates, though quite low, have been rising up to .96% in November from .62% in September. Some analysts predict this will rise to 2% by the end of 2009.

We now have a new financial dilemma. Congress and the Administration were reluctant to bail out the auto industry. The question again is: should we do this for commercial lenders as well?

Commercial developers and lenders are standing in line for a bailout originally appeared on BloggingStocks on Thu, 25 Dec 2008 09:30:00 EST. Please see our terms for use of feeds.

Continue reading Manhattan, London, Tokyo office rents decline for first time since 2002

Manhattan, London, Tokyo office rents decline for first time since 2002 originally appeared on BloggingStocks on Tue, 25 Nov 2008 16:45:00 EST. Please see our terms for use of feeds.

Welcome to Way Off Wall Street, a column dedicated to providing Main Street opinions on topics of interest to investors. Each installment highlights the views of Americans who are far removed from the canyons of Wall Street -- and who often see things more clearly as a result.

The current economic downturn began in real estate, ripping through the construction industry as it went. The banks began to crumble next, as declining real estate values pulled their phantom capital support structure from beneath them.

Then Wall Street began quaking, as good faith and trust were swept aside by the realities of mismanagement, fraud, and corruption. Then the insurance industry began to take a kick in the teeth due to its ties to Wall Street's derivatives securities mill. Soon, we'll all bear the brunt of yet another round of insurance premium increases as a result.

Continue reading Way Off Wall Street: Retail is the next economic train wreck; expect a Black Friday bust

Way Off Wall Street: Retail is the next economic train wreck; expect a Black Friday bust originally appeared on BloggingStocks on Sat, 18 Oct 2008 10:00:00 EST. Please see our terms for use of feeds.

The Washington Post reports that the Mortgage Bankers Association (MBA) is getting what it feels is a raw deal on a mortgage for its Washington headquarters. Boo hoo! The MBA is buying a building there for $100 million, but is paying a higher interest rate on its mortgage as its income declines and the leasing market is slow leaving it with no tenants for the building.

This couldn't have happened to a nicer association. After all, the MBA encouraged people to take out subprime mortgages -- many of which went bad. Despite the Fed's rate cuts from 5.25% to 2.25% mortgage interest rates are up thanks to bankers' fear of lending. And the resulting economic slowdown is making it harder for the MBA to find tenants for its building.

Let's survey the damage to the MBA. First, its membership has declined 17% in the last year and it predicts a 10% to 15% decline in revenue as a result. Bankers are making the MBA put up about 10% more of a down payment than it had planned and the lack of tenants has moved its lender to increase the financing costs slightly. Perhaps there's justice in the universe. If not, at least MBA's predicament is giving it a taste of its own medicine.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

Mortgage Bankers Association struggles to pay its mortgage originally appeared on BloggingStocks on Mon, 07 Apr 2008 09:33:00 EST. Please see our terms for use of feeds.

Consider U.S. Steel to strengthen your portfolio originally appeared on BloggingStocks on Wed, 26 Mar 2008 18:11:00 EST. Please see our terms for use of feeds.

Commercial real estate developers are no longer immune to the credit crunch hitting residential real estate owners and developers, according to today's Wall Street Journal. Yesterday in visible proof of the problem, a Las Vegas casino developer, Bruce Eichner, defaulted on a $750 million loan from Deutsche Bank because he was not able to refinance the debt. It's not the first time he's been caught up in a credit crunch. The Journal reports he lost several projects in New York City during its real estate downturn in the early 1990s.

The Journal also points out he's not the only one having trouble getting refinancing. Other commercial developers in trouble according to the Journal include:

• A major Australian shopping mall developer, one of the largest owners of shopping centers in the U.S., has been unable to refinance $3.4 billion in short-term debt.

• New York developer Harry Macklowe, who bought office buildings at the top of the commercial real estate market, can't refinance $7 billion in debt that's due in February. He's trying to sell his General Motors Building in midtown Manhattan to come up with cash.

Continue reading Mortgage mess impacting commercial real estate lending

Mortgage mess impacting commercial real estate lending originally appeared on BloggingStocks on Thu, 17 Jan 2008 10:47:00 EST. Please see our terms for use of feeds.