CRE Loans Going Bad at Frightening Rate
Posted: Tue Aug 04, 2009 11:54 pm
Holy shnikes...check out the charts below to see it in all its glory...
http://www.businessinsider.com/henry-blodget-commercial-real-estate-loans-going-bad-at-frightening-rate-2009-8
I suppose this is all already fully priced into the markets right?
Note that these problems have nothing to do with "liquidity." (Remember earlier this year, when Tim Geithner was blaming everything on a "lack of liquidity"?) These loans are going bad because the real estate companies can't make their interest payments--because the tenants can't pay their rent.
Richard summarizes the situation:
Loan Performance Deteriorating Precipitously
* Speed of deterioration in loan performance is unprecedented, even relative to the early
1990s
* Total delinquency rate reached 4.1% in June, 2.2 times its March level and 3.5 times
that in December
* Delinquency rates are likely to soar higher over next 24+ months on billions of dollars of pro forma loans that never stabilized and resetting partial IO loans
* With 2,158 delinquent fixed rate loans ($27.9 billion) special servicers may soon be under pressure
* DB CMBS Research projects term losses will reach 4.3-6.3% for the outstanding CMBS
universe ($31.3-$46.4 billion), and 8.4-12.1% for the 2007 vintage
http://www.businessinsider.com/henry-blodget-commercial-real-estate-loans-going-bad-at-frightening-rate-2009-8
I suppose this is all already fully priced into the markets right?