CRED Buyer

Commercial Real Estate Begs for Bailout: Old Whine in New Bottle

Just out of curiousity - where do the data that 6 times more reatil than Europe?


On Jul 11 12:00 PM Rhino Realty wrote:

> The United States has 6 times more retail/commercial space than Europe.
> Why ? Because the banks provided far toooo much credit to retailers
> (ie Circuit City, Linens N Things etc..) and tooo much $$ for the
> developers. I spent the past 20 years of my career as a retail developer
> and I admit that the banks allowed my company to collect developer
> fees and loan to values that were excessive....the hardest part of
> this crisis is summed up in one word: LOSS. Nobody likes to lose.
> I certainly don't; however, in this game called 2009 Recession, there
> will be many losers, and perhaps no winners. All of the banks will
> lose because they all had a hand in the pie called Greed. Many REITs,
> Developers and Investors will also feel the pain ad they were under
> capitalized from the on set....The next game (called 2010 Turnaround),
> we will see fewer retailers, fewer developers, and fewer bankers.
> This should align the game to be more like the games played in Europe
> where there aren't drug stores, office supply stores, electronic
> stores or video stores on every corner. Cheers !

Commercial Real Estate Not Immune to Economic Woes

I purchase commercial real estate loans in the secondary market. Those transactions done in late 2006 and 2007 before the crash, are deepely underwater. one exmaple:

1. Very highend Hotel in California with $90MM in debt and only a $4.5 NOI, and is arguably stabilized.

In todays underwritting this entire hotle is worth probably only $60MM. not the $112 million the bank thinks. They are trying to sell the B piece at price that still values teh hotel at $95. This hotel is owned by a mjor REIT - and they have several of these loans, are they going to put up the additional capital by my estimate $45MM that will be needed to refinance these loans when they come due in 3 years. I am seeing this all over the place, and teh smart guys on Wall Street still seem to be smoking crack.

When it is time to refinance this debt assuming there are some lenders out there, they will want 1.2 - 1.4 DCR inplace, real cap rates, and a 60 - 75% LTV if you apply this metric to a lot of these deals out there - a lot of 06 and 07 loans are under water.

Today's Federal Action Will Alter the Face of Finance

Can someone explain to me this:

Unlike the RTC which held bad debts from FAILED institutions, how can the FEDs force banks to sell "illiquid" assets at some price south of PAR and not force the banks into the same need to shore up Capital??? And if they do force them to sell at a "real" discount" will the FED then inject Capital and wipe out or dilute shareholders??

No Signs of a Housing Bottom

well as someone who works at a Vulture shop buying Commercial Real Estate debt and REO, as well as bulk packages for homes, land lots, finished lots, ecetera . . . This is my take there is some level where investors like myself is willing to buy and hold. This will put a floor in further drops, by soaking up excess supply. From whta I have seen, and yesterday aline I putin a bid on 117 condos in miami in one building, and 117 finished lots in florida, and 224 Finished Homes in teh Inland empire in CA - NONE of my bids were accepted there is still a bid/ask spead that while it has shrank still exist. About two montsh ago Indymac had a portfolio sale thru Eastdil Secured of over $600 millionin resi land, lots, and homes, only about $100 MM sold, and thsi was before they went belly up. The Feds lifelines to bank has slowed the painful process of banks having to sell to raise capital, they are making it a slow motion process. Miami still has some problems the bid/ask spread there is huge, on the 117 units they were looking for $15-$20MM I bid $5MM. Well located projects are clearing. but at say 30-40% on peak price, on a lot of deals is probably a marketing clearing price. NOw maybe there is cheaper money out there than mine, and I am sure there is, but I feel confident there is a floor.

Perhaps the best indicator; I bought a Condo and closed thsi week in San Diego. Prior Price Prior Price in 2006 = $525,000 my price $409,000.

Spotting Banks In Danger

But why just use "non-accrual", why not 90 days or more, or 30-60 days?

Spotting Banks In Danger

FDIC "BANK FIND"

www4.fdic.gov/IDASP/ma...

Miami Condo Vultures: A Fool's Game

We are a company that purchases commercial real estate debt and have looked at quite a few deals in Florida including Miami, where we were looking to purchase an entire project that was not too fractionalized (more than 30% sold as condos), I basically agree with all of teh comments in the article, but he also missed a couple of otehr costs including property taxes. Of the deals we have looked at in Miami without fail none have made sense as a reversion to rental. Miami still has a way too fall. Other areas of florida however . .