Office Landlords Can’t Get a Loan Anymore

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[–]sdl5 5 insightful - 1 fun5 insightful - 0 fun6 insightful - 1 fun -  (8 children)

Only 3 years late....

The death knell on an already overbuilt, over speculated, and rapidly becoming unused even by renters market was tolling loudly by the end of 2020.

[–]BlackhaloPurity Pony: Pусский бот 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (1 child)

Covid and work-from-home, and 7% interest rates are the one, two kick in the teeth for CRE. IMHO, this meltdown will be worse than 2008. And it's going to happen faster too, because unlike home mortgages, CRE borrowers are far more likely to default, leaving the banks with property worth less than the money owed.

I'm calling a top to equities. $69 bbl oil (among other commodities) is proof that the economy is in slow-down, if not actual recession. The market probably won't figure it out until February when retail start laying off and CRE start defaulting on payments.

[–]sdl5 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (0 children)

Agreed... Though I think the fudging of Q4 data for political coverup for 2 or 3 years now will continue, and this will create a screen the market will likely fail to see past- so end of March or a bit after is my guess.

[–]InumaGaming Socialist 3 insightful - 1 fun3 insightful - 0 fun4 insightful - 1 fun -  (2 children)

This is the same issues in the gaming industry too.

People don't have money for cultural entertainment and they're trying to take more money from the gamers while pushing for more profits.

Developers are getting laid off which makes the games less profitable and the company less stable.

And gamers themselves are moving to companies that do better without the stigma of layoffs.

So all around this system, we all love in collapse.

[–]BlackhaloPurity Pony: Pусский бот 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (1 child)

This guy is pretty entertaining on gaming issues as well.

[–]InumaGaming Socialist 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (0 children)

I just got notice of him existing.

He's a former Blizzard person who pretty much seems bitter on that front. I really have to pull my analysis soon on Class Gaming but I've been busy with other stuff.

[–]RR_2023 4 insightful - 1 fun4 insightful - 0 fun5 insightful - 1 fun -  (2 children)

For decades I've noticed how there can be vacant buildings, and yet still they build new buildings rather than occupy old ones. The vacant buildings become an eyesore. And they wastefully clear off some other lot, create a mess with construction, etc...

[–]InumaGaming Socialist 3 insightful - 1 fun3 insightful - 0 fun4 insightful - 1 fun -  (0 children)

Capitalism: Poverty in abundance

[–]sdl5 4 insightful - 1 fun4 insightful - 0 fun5 insightful - 1 fun -  (0 children)

Used to be an easy write off of imaginary loses against real profits hand over fist elsewhere.

Or hold the land with no debt and sell to speculators later plans.

Before things went totally off the rails without the POP! usually involved.

C19 govt money and the lockdowns covered up a big commerical RE fall that was just starting to happen Fall 2019

[–]unagisongsBurn down Reddit! 5 insightful - 1 fun5 insightful - 0 fun6 insightful - 1 fun -  (0 children)

The office sector relies on a steady stream of debt. Landlords typically buy buildings with big mortgages, and when they mature they pay them off by taking out new loans or by selling. That worked well when buildings were full and loans cheap and plentiful: In the first nine months of 2019, for example, 88% of CMBS office loans were paid off when they matured, according to Moody’s Analytics.

This is awful business practice. The risk to reward ratio is begging to flip your business upside down and drown you in debt. This is how former "rich" people end up jumping off buildings they are upside down on.

[–]RandomCollection[S] 8 insightful - 1 fun8 insightful - 0 fun9 insightful - 1 fun -  (0 children)

I don't have sympathy for these big real estate and property management companies. They've been pretty abusive towards their tenants for a long time.