Comments on: The commercial real estate boomlet http://blogs.reuters.com/felix-salmon/2010/04/07/the-commercial-real-estate-boomlet/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: PBeller http://blogs.reuters.com/felix-salmon/2010/04/07/the-commercial-real-estate-boomlet/comment-page-1/#comment-13430 Tue, 13 Apr 2010 20:20:48 +0000 http://blogs.reuters.com/felix-salmon/?p=3279#comment-13430 Seems relevant to me. Today’s conservative underwriting is tomorrow’s catastrophic failure of common sense. Many negative-amortizing residential loans were written at a 75% loan to value. Then California home prices fell 40% in a year.

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By: Storyburn_com http://blogs.reuters.com/felix-salmon/2010/04/07/the-commercial-real-estate-boomlet/comment-page-1/#comment-13257 Wed, 07 Apr 2010 23:13:38 +0000 http://blogs.reuters.com/felix-salmon/?p=3279#comment-13257 17% vacancy rate is getting worse

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By: HBC http://blogs.reuters.com/felix-salmon/2010/04/07/the-commercial-real-estate-boomlet/comment-page-1/#comment-13256 Wed, 07 Apr 2010 23:03:57 +0000 http://blogs.reuters.com/felix-salmon/?p=3279#comment-13256 In many US cities, commercial property development is heavily subsidized out of the local tax base, taking such ventures – sometimes entirely – out of the realm of real-world economics. No matter how many vacancies abound, there will always be a defined per sq ft threshold below which commercial leases will never go, not until these subsidies are scrapped. Meanwhile…

I can attest from personal observation that aquarium fish actually have longer memories than urban legend allows, longer than commercial property developers whose sense of self generally mirrors that of the countless post-WWII Austrians memorializing themselves as having been in The Resistance.

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By: mrblandings http://blogs.reuters.com/felix-salmon/2010/04/07/the-commercial-real-estate-boomlet/comment-page-1/#comment-13243 Wed, 07 Apr 2010 17:16:54 +0000 http://blogs.reuters.com/felix-salmon/?p=3279#comment-13243 I’m not sure why you’re talking about “risky real-estate loans”, or even what “these loans” is supposed to refer to. This is an article about equity investors, not lenders. They’re paying too much, but that has nothing to do with loans going bad, and the likely loss of some of their equity capital shouldn’t have any systemic effects. Lenders are currently not doing much more than 60-65% loan to value, and are underwriting income conservatively for the purposes of establishing that value, so any new debt financing put in place in any of these purchase transactions (the SL Green deal replaced an existing loan with equity, and will presumably be refinanced after the close out the current owner) should be relatively protected. It may be that lenders yet go crazy, but we’re not there at the moment.

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