Posted on 03/23/2024 8:01:59 AM PDT by Lockbox
For months, if not years, panic-inducing headlines have lamented the existential crisis facing the U.S. office market as a “wall of maturities” looms: $2.2 trillion of commercial real estate debt coming due between now and the end of 2027, according to Trepp estimates.
Rather than sell at significant losses or refinance into interest rates that currently stand at 23-year highs, many office owners are clinging to backward-looking valuations calculated during cushier times by asking lenders for extensions—often granted only in the short-term—on loans that would otherwise mature.
(Excerpt) Read more at urbanland.uli.org ...
Lenders don’t want to foreclose on properties in New York because they (the lenders) have assigned an effective value of $0 to the underlying assets.
Banks are famous for being lousy managers of distressed income properties. The smart loan committees will make deals, the dumb ones will do the boiling frog routine.
Sketchy, sketchy, sketchy.
Commercial real estate is better suited to debt financing for several reasons. A big one is that lease terms tend to be much longer — which gives the lender more confidence that the borrow will have sufficient cash flow to make the payments.
“HERE AG James, here’s your RICO and it’s not Trump! Why have you not gone after this industry wide fraud. ”
Her persecution of Trump has nothing to do with any crime. She is a hateful black woman, racist to her core. She vowed to “get Trump” from day one of her campaign. Same with that Willis cow in Fulton county GA. This is “get whitey” on steroids. Prove me wrong.
Many investors apply as “owner occupied” get a 30 year lower interest mortgage and get a sleeping bag and take a few photos of themselves sleeping in the newly acquired property to avoid a mortgage fraud conviction and convert the property to rental.
Not recommending this approach but it does work flawlessly.
Great article, thanks for posting!
And the scenario you describe may not be a major problem as long as the mortgage is being paid. The bigger issue is when it comes to maintaining consistency for insurance, income tax and capital gains tax purposes.
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All of accounting has a basic assumption which can be a major problem.
The assumption is that the business (or investment or loan) is with a going concern.
Many of these office buildings are not going concerns—they are extend and pretend Unicorns.
Selective prosecution is the enforcement or prosecution of criminal laws against a particular class of persons and the simultaneous failure to administer criminal laws against others out-side the targeted class. The U.S. Supreme Court has held that selective prosecution exists where the enforcement or prosecution of a Criminal Law is "directed so exclusively against a particular class of persons … with a mind so unequal and oppressive" that the administration of the criminal law amounts to a practical denial of Equal Protection of the law (United States v. Armstrong, 517 U.S. 456, 116 S. Ct. 1480, 134 L. Ed. 2d 687 [1996], quoting yick wo v. hopkins, 118 U.S. 356, 6 S. Ct. 1064, 30 L. Ed. 220 [1886]). Specifically, police and prosecutors may not base the decision to arrest a person for, or charge a person with, a criminal offense based on "an unjustifiable standard such as race, religion, or other arbitrary classification" (United States v. Armstrong, quoting Oyler v. Boles, 368 U.S. 448, 82 S. Ct. 501, 7 L. Ed. 2d 446 [1962]).
The housing play was another big money mistake. They underestimated the cost of renting to people who are entitled and do care about anything except themselves. So these rental home communities are not working out as planned.
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