7/21/2009 2:05 PM EDT The recent Moodys report on commercial real estate makes
me look like Little Sally Sunshine. Moody's uses a red green yellow
rating system for tracking various sectors of the commercial market
and for the first time ever none of them were green. Hotels had the
lowest possible rating recording sector scores of zero. RevPar
rates for the group were below the baseline by the largest amount
ever. Industrial was firmly in the red zone while the lone green
from the prior report, multifamily homes, slipped into yellow
status They also said that any improvement for the commercial
market is unlikely for several quarters.
Prices for commercial property are down 34% in total from the highs
of October 2007. The decline appears to be accelerating with a 7.65
decline in May after an 8% drop in April.
There is no way to put a pretty spin in these numbers. There are
billions in commercial real estate loans that need to be refinanced
and are going to spiral as prices continue to fall.
Sounds like business is not looking good in Florida. Maybe
Dallas and other southwest cities are being spared so far. I
am surprised not to see any visible evidence in Dallas yet of the
sputtering economy.
What's holding the CME REITS up? I believe its simple.
Everyone knows the real issue involves the concern over
ability to roll over debt. I believe "the market" thinks that
if push comes to shove, the Feds will come in and somehow provide
support.
Will they? I think probably not, but its certainly a
possibility.
Also, corporate bonds continue to do well. Some of these
REITS that certainly could not have rolled debt a couple of months
ago will probably be able to if the recent (3month) trends
continues.
Personally, I don't think its all going to be OK. But
things have improved every month since March.
Posted by rgoodwin on 21st of Jul 2009 at 03:52 pm
Well, we've already committed/obligated 23.7 TRILLION for bail
outs to this point. When the commercial market tanks - what's
another 24 T - I mean come on - you 've got that buried in your
backyard don't you? Doesn't psychology/history have something to
say about everyone feeling so exhuberant - at exactly the wrong
time? Matt and Steve's 1000 - 1100 will play out and maybe even a
little more. No body will be expecting what happens next....
I suspect one of the Government bodies might go belly up....FDIC
or
With growth and inflation coming back with the recovery
talk.....when the yields spike up too high....the only way to crash
the stock market to scare money back into bonds will be to allow
those liquidity govt programs to expire.
Posted by dylan398 on 21st of Jul 2009 at 03:36 pm
they also changed the accounting rules...I believe they don't
have to "mark to market" either.....letting them hold on. I was a
backer of this idea, but now I believe it will only prolong the
situation. But, It makes it a difficult short..in the intermediate
term...
Thanks for posting. I have a few friends who deal in commercial
real estate, and they bear this out in what they're saying. The
next leg down may well be lead by the implosion of commercial loans
as they are unable to refi -- which will bring down many hundreds
of smaller to mid-sized banks which will push the FDIC well past
its current provisions.
Newsletter
Subscribe to our email list for regular free market updates
as well as a chance to get coupons!
SRS implications (RealMoney article)
Posted by kurzweg on 21st of Jul 2009 at 02:22 pm
Prices for commercial property are down 34% in total from the highs of October 2007. The decline appears to be accelerating with a 7.65 decline in May after an 8% drop in April.
There is no way to put a pretty spin in these numbers. There are billions in commercial real estate loans that need to be refinanced and are going to spiral as prices continue to fall.
In my area more than
Posted by as2029 on 21st of Jul 2009 at 03:25 pm
In my area more than 50% of the stores are empty, the same offices, etc. etc. etc.
My area is Aventura, Fort Lauderdale, Hollywood, Miami, .......... YES THE BEST OF FLORIDA
SRS must to be in the moon today, yesterday and a few weeks ago .......
and not, WHY?
you have idea how much money they made in CNBC and others pushing to market to the sun?
at the end lets see if they burn the people money or all is so nice and bright....
Title: Florida busnesses Sounds like business
Posted by dallassteve on 21st of Jul 2009 at 03:46 pm
Sounds like business is not looking good in Florida. Maybe Dallas and other southwest cities are being spared so far. I am surprised not to see any visible evidence in Dallas yet of the sputtering economy.
Commercial Real Estate
Posted by kurzweg on 21st of Jul 2009 at 03:34 pm
What's holding the CME REITS up? I believe its simple. Everyone knows the real issue involves the concern over ability to roll over debt. I believe "the market" thinks that if push comes to shove, the Feds will come in and somehow provide support.
Will they? I think probably not, but its certainly a possibility.
Also, corporate bonds continue to do well. Some of these REITS that certainly could not have rolled debt a couple of months ago will probably be able to if the recent (3month) trends continues.
Personally, I don't think its all going to be OK. But things have improved every month since March.
Commercial RE
Posted by rgoodwin on 21st of Jul 2009 at 03:52 pm
Well, we've already committed/obligated 23.7 TRILLION for bail outs to this point. When the commercial market tanks - what's another 24 T - I mean come on - you 've got that buried in your backyard don't you? Doesn't psychology/history have something to say about everyone feeling so exhuberant - at exactly the wrong time? Matt and Steve's 1000 - 1100 will play out and maybe even a little more. No body will be expecting what happens next....
I suspect one of the
Posted by siewyin on 21st of Jul 2009 at 04:03 pm
I suspect one of the Government bodies might go belly up....FDIC or
With growth and inflation coming back with the recovery talk.....when the yields spike up too high....the only way to crash the stock market to scare money back into bonds will be to allow those liquidity govt programs to expire.
my 2 cents
they also changed the accounting
Posted by dylan398 on 21st of Jul 2009 at 03:36 pm
they also changed the accounting rules...I believe they don't have to "mark to market" either.....letting them hold on. I was a backer of this idea, but now I believe it will only prolong the situation. But, It makes it a difficult short..in the intermediate term...
Thanks for posting. I have
Posted by puma on 21st of Jul 2009 at 02:58 pm
Thanks for posting. I have a few friends who deal in commercial real estate, and they bear this out in what they're saying. The next leg down may well be lead by the implosion of commercial loans as they are unable to refi -- which will bring down many hundreds of smaller to mid-sized banks which will push the FDIC well past its current provisions.