Yep. Can't run a business on empty...
...this building on Space Center Drive / Technology Ct in Colorado Springs was completed in 2008. It has never been occupied. To me, it's the canary in the economic coal mine.
Posted on 02/14/2010 3:51:58 AM PST by TigerLikesRooster
Commercial Real Estate Losses Could Hit $300 Billion: TARP Panel
02/12/2010 By: Carrie Bay
Losses from defaults on commercial real estate loans maturing in the next few years could go as high as $300 billion, threatening to topple nearly 3,000 community banks nationwide, a federal watchdog group has concluded.
Market analysis by the Congressional Oversight Panel (COP), charged with keeping tabs on the government’s Troubled Asset Relief Program (TARP), shows that $1.4 trillion in loans made over the last decade for retail properties, office space, industrial facilities, hotels, and apartments will reach the end of their terms and require refinancing between 2011 and 2014.
According to the panel, the loans most likely to fail are those made at the height of the real estate bubble, when it seemed property values could go nowhere but up. Since that time, commercial property values have fallen more than 40 percent, and now, nearly half of the loans coming due are “underwater,” the panel said, making refinancing particularly difficult to secure.
As the panel notes, “Even borrowers who own profitable properties may be unable to refinance their loans as they face tightened underwriting standards, increased demands for additional investment by borrowers, and restricted credit.”
The COP says community banks, rather than large Wall Street institutions, face the greatest risk of insolvency due to mounting commercial real estate (CRE) loan losses. According to federal guidelines, 2,988 banks nationwide are classified as having a “CRE Concentration.”
(Excerpt) Read more at dsnews.com ...
P!
“As the panel notes, “Even borrowers who own profitable properties may be unable to refinance their loans as they face tightened underwriting standards, increased demands for additional investment by borrowers, and restricted credit.””
Unless you have significant collateral you can forget a business loan.
The CRE snowball is beginning to roll. This will have significant downward pressure upon Wall Street and the markets. Flight will be to commodities which will lead to higher consumer prices and further contraction of consumer spending. 0 & Co. are getting exactly what they want.
The value of commercial real estate is heavily dependent on its stabilized cash flow, i.e., how much net income the property makes.
A lot of properties out there that made very good sense and had conservative loans on them have so dropped in value that they do not work with the current loans they have.
I’m looking for office space right now. Negotiating is down to which office will give me the most free rent. Had one at 6 months free.
They will squeeze you eventually so get 'em while you can.
Unless you have significant collateral you can forget a business loan.
Yep, the boxchecking auditors are in charge and clear the way 'cause the ball is rolling downhill.
>>Flight will be to commodities
AKA more bullshyte manipulation of prices by “investors” - just as we saw with the manufactured oil prices when gas hit $5+ in 2008.
If you can’t/don’t intend to take physical delivery of the commodity you shouldn’t be allowed to trade....
Demand should be real - not a figment of Goldman’s trading accounts.
Agree 100%. Most people do not know that 4 men basically in NYC (4 firms) possessed 71% of all the oil futures contracts for July 2008.
And the SEC regulates how?
Food, clean water, oil and electrical power will be the commodities that are run on next. We've just witnessed this summer the use of a non-native minnow to fry 30% of the agriculture in central CA.
I say oil because Zeewoe's thugs, the EPA, etc. are on an all out push to ban exploratory drilling of the coasts off the US and all federal lands not covered to date.
I wonder whom all owns all the CDS junk paper on that money pit?
OF course, their prized CDS paper doesn't say spit about their percentage of investment on that address and its value/loan amount.
The worst part of the AIG/CDS bailout is that many holders of credit default swaps did not even own the underlying securities - it was a novel way to short the securities. And we bailed them out on their bets against the economy.
bump for later.
A lot of fictional money was generated on the books that allowed investment firms to leverage practically everything to include commodities in the top 5 too (2008 oil /gas prices).
To this date there still has not been any regulations enacted to prevent banks from leveraging at 80:1, where the norm use to be 12:1, 15:1 tops.
That is the golden calf that the taxpayer paid for but 'they' keep.
Repeal of the Glass-Stegall Act under the GOP watch was the first step to the global rip-off.
Couple the fore mentioned with the recent SEC vote of 4-1 in January to enact rules ('legislation') to allow money market mutual funds / investment companies / banks to deny payouts to investors 'in the event of a crisis' even in proven & documented financial hardship really has soured my stomach.
No where in the 'rules' changes is it specified (I have read it several times) does is specify what constitutes 'a crisis'. That is one major loophole and a huge red flag.
Though the rule changes specifically addressed money market mutual funds, there is no grace period to prevent investment institutions from rolling all money market monies (bank CD's included) into a money market mutual fund w/o the investors consent.
Some major is coming down the tubes very very soon and it ain't no cake walk.
Some major = some major convulsing sh$t
Any big developer can stand a dead building or two. After that the carry multiplies to the point that it drags down other properties.
There is a domino effect,which only accelerates.
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