REITBull

Commercial Real Estate - Make Up Your Own Mind

"Almost 60% of the loans out there, at least, were securitized in nature."

User,

I have to disagree with you on this. At the end of Q1 only 21.4% of CRE loans were securitized (MBA). New loans are getting done at 60% LTV for class A, infill markets. I wouldn't take Sam Zell's comments at face value either. Remember that he called a bottom in Residential real estate in Spring 2008.


On Aug 03 09:09 PM User 465743 wrote:

> Good article. But you are missing something. The lending at 60% is
> a fantasy. If you have a Class A office building in a major city,
> you may be 50%. If you have a hotel, a strip mall, a big box retail
> center, an asset located in a small town, etc, forget it. There is
> no financing. The banks are not lending the money that the Feds gave
> them. The only money available, really is money for apartments from
> HUD, Fannie Mae or Freddie Mac. Securitization expanded the credit
> markets so that assets that previously did not get financed were
> financed. Almost 60% of the loans out there, at least, were securitized
> in nature. So, maybe TALF will work, but I don't see the same focus
> on the dangers as I did when AIG was going bust. They focused on
> housing first, because it is politically correct. But they are missing
> the boat on commercial in terms of urgency and this will bring on
> a double dip. Commercial real estate doesn't work without debt. And
> the banks are not helping and the Feds are not helping. If there
> is no debt, there is no market and values are suspect. The jobs multiplier
> for commercial real estate is huge. Big players are taking advantage
> of low Libor rates and sitting on assets. Debt service is being paid
> but their values are in the tank. Zell is right. Eventually assets
> have to be refinanced and it will be a bloodbath. Write your Congressman,
> because they aren't focused on this and are clueless.

Goldman Expects Large Drop in Rents; REITS Will Be Affected

I think its a bit of a stretch to use Residential REIT data to draw conclusions about the performance of commercial REITs. I agree with GS on the Res side but CRE is a different dynamic. Also, I could be missing something here, but why would higher cap rates lead to increased interest expense?

General Growth Properties Files for Bankruptcy

Okay, I feel like a total hypocrite, but I just put a very small position on SRS. It was just too attractive at 26 and change. I still have a much larger position on the long side and will continue to buy URE....Just a short term trade but I thought I would come clean.

General Growth Properties Files for Bankruptcy

Or are the dilutions already priced in? Everyone and their mother saw the offerings coming.

General Growth Properties Files for Bankruptcy

Take a look at the holdings in IYR for your answer on SRS. GGP is nowhere to be found and is the exception not the rule. SPG, KIM, AMB have had success raising capital in the public markets. SRS was bled dry a long time ago. When your average Joe is talking about getting in on the action (i.e. shorting CRE) the bubble is about to pop or already has.

Disclosure: long URE


On Apr 16 11:49 AM [e-mail] wrote:

> Can someone ... ANYONE ... explain to me why GGP, the second largest
> mall operator in the US, is declaring bankruptcy and SRS is within
> spitting distance of an all-time low on the same day?