They finally pushed the envelope to the line
Make it, break it, take it
Till those CREs are overrated
Leaving the scene in devastation
Come on
Tick tick BOOM!

Karl,

You wrote in a previous ticker that we should move all our money to community banks that have strong balance sheets with very little CRE loans. Well, how exactly do I determine if a bank has a strong balance sheet. Can you explain in ticker for the non-business types like me? Maybe use one of the local banks in your area as an example.

Thanks

"I just want to be sure to wear a raincoat when the the official call is made and the (male) spinmeisters all ejaculate at once."


Liesman is already ejaculating daily on CNBS

Why are you limiting it to males?

And when CRE finally blows up, SRS will skyrocket all the way back up to $19.

Quote:

And when CRE finally blows up, SRS will skyrocket all the way back up to $19.

lol nice

Quote:

How are the REIT's still levitating?

Because they are a surprisingly diverse group of businesses. They ain't all malls.

Of the top 10 components of IYR, you have 1 leveraged owner of MBS, 1 owner of apartment buildings, 1 timber company, 2 health care real estate comapanies, 1 self-storage comapany, 1 hotel owner, and 3 traditional "commercial" real estate REITS (some retail, some office space). The REIT index isn't as exposed to CRE problems as we might like.

NLY: he company invests primarily in mortgage pass-through certificates, collateralized mortgage obligations, agency callable debentures, and other mortgage-backed securities

BXP: the ownership and development of office properties. Its properties are located in Boston, Massachusetts; Washington, D.C.; midtown Manhattan, New York; San Francisco, California; and Princeton, New Jersey

EQR: the acquisition, development, and management of multifamily properties in the United States.

HCP: invests in health care-related properties and provides mortgage financing on health care facilities.

HST: engages in the ownership and operation of hotel properties.

PCL: owns and manages timberlands in the United States.

PSA: engages in the acquisition, development, ownership, and operation of self-storage facilities in the United States and Europe.

SPG: engages in the ownership, development, and management of retail real estate properties.

VTR: owns, and leases healthcare related and senior housing facilities.

VNO: owned 111 office properties aggregating approximately 30.7 million square feet in the New York City metropolitan area, as well as in the Washington D.C. and Northern Virginia area; 111 retail properties in 9 states and Puerto Rico aggregating approximately 16.2 million square feet; and 10 properties in 6 states approximately 9.5 million square feet of showroom and office space.

Are you saying SRS is going to stop plummeting?

Mish has some comments on CRE...

http://globaleconomicanalysis.blogspot.c....

"
Bernanke Terrified Over Commercial Real Estate

Given the commercial mortgages have "completely shut down", does anyone buy Bernanke's line that he is "somewhat concerned"?

Here is the real deal: Bernanke is terrified and so is the rest of the Fed.
"

To new people here: I'd be careful shorting these banks. Over the past two weeks it seems like every big gainer I have been seeing has been a regional/small/WHO??? type of bank or finance outfit. Total unknowns going from 1.00/shr to 2.00 in a day. 30-100% daily gains on stuff you wouldn't touch with a ten foot pole. I am not pumping, just saying. I have no positions in them. Either they are being officially propped (doubtful) or speculators have moved in to try to push them higher for fast money. I think "shorting" larger banks (UBS, HSBC) by using puts is easier because there is more predictable price action and enough volume to absorb/damper attempted manipulation. The obvious play (short all banks) is not necessarily a guaranteed winner. FWIW.

Forget projected interest rates, default terms, complicated 'what if's'...what do you think will happen when 30% of the production and services in this country are vaporized?

Takes a lot of maintenance and utilities to run commercial. There won't be enough money in the system for magical buyers to just appear. This is uncharted territory. With vandalism and unpaid taxes and utilities, vacancies will soon become liabilities. Even a little thing like reduced wasterwater revenues can sink a city...all that concrete means more run-off and higher costs. Cities are going to choke as fast as CRE lenders. Just as a few people in a vacant condo can't carry the huge maintenance fees, functioning companies will be expected to pony up. Palm Beach County is already doing that with property taxes. **** 'em.

If there are no more bank bailouts, title disputes will soon be reversed. "Hey, we don't own that Mortgage...it got sent to XXX." They know that liabilities for fines and taxes will exceed property net worth.

How this hasn't imploded yet amazes me.

what about the hotels they are building every lil town has a new Hampton Inn and Holiday Inn Express going up side by side

The late 80's real estate bust in Houston was really eye opening. I knew class C apartment owners who had free and clear properties who could not pay the bills. Maintenance cost stay the same while the rents keep declining. The market did not turn around until you had class A properties with one or two quarter of a true 10 cap with loans at 8%.

I really like this part

""Well, this time is much worse than the early 90s. We had a monstrous residential real estate bubble and both the lending and rent rates on CRE went bananas to the upside during the mid 2000s. I saw it and just shook my head - and what's worse, they're still building in parts of this country, including right here where I live, despite businesses going under left and right.""

Which brings me to this part that I could not understand
Here in cape coma fl, a guy is building huge commercial area at this time, considering that he already built two adjacent complex that were built in the peak and still has empty spaces.
Never mind the part that I don't see him having enough parking space and how the hell city giving them permit and the way building going up right around two houses that sitting right in the middle of it.
The guy who is building it, saying he was planning on it and this is the best time.
Stupidity is rampant