CRE Double Dip: Moody's/REAL Commercial Property Index Drops 0.5% In May

Moody’s/REAL Commercial Property Price Indices, May 2010

Comments

[Cheeky Bastard]

OT

Yo, Tyler http://thinkprogress.org/2010/05/19/bp-goldman-sue-oil/

"Yo dawg [BP,GS]I heard you are being sued so we sued you so you can get sued while you are being sued"

[hedgeless_horseman]

You bastard.  I clicked on that site, and now I have to take another shower.

[ReallySparky]

Hence the name...

[hedgeless_horseman]

No suprises here, boys and girls.  Every business I know is asking for cheaper rent, and getting it.

[MsCreant]

Put your hands in the air, wave em around like you just don't care. Gold down, Dow down, wheeeee! Roller coaster, of love. 

[tecno242]

Really?  down 40% from 2 years ago... ?  really?

Cause SPG shows on their balance sheet that their asset values have hardly dropped...

oh wait.. so does BXP's and VNO's.. wow.. some of them even show increases.

interesting....

[rolleyes]

[Reggie Middleton]

You'll notice a lot of that if you just look past that pretty glossy cover in the front of the annual report (feel free to click the links if you want to dig in deeper)...

Reference the truth: CRE 2010 Overview (2.85 MB 2009-12-16 07:52:36),

1. rents are dropping rapidly;
2. CRE values are collapsing;
3. CAP rates are exploding;
4. the refinancing market is looking for much lower LTVs while the property values of recently purchased properties are dropping simultaneously,
5. and an often overlooked occurrence – REITs are selling off the more valuable assets to fund the gaps necessary to rollover overpriced debt, further reducing rent rolls and dramatically reducing the overall value of the existing portfolios.

These five ingredients combine to make a deadly elixir. Click any of the charts below to enlarge…

The truth as applied to certain REITS

the truth as applied to REIT holdings...

The results of these activities have been congealed in our analysis of Macerich’s entire portfolio of properties (118+ properties), including wholly owned, joint ventures, new developments, unconsolidated and off balance sheet properties. Below is an excerpt of the full analysis that I am including in the updated Macerich forensic analysis. This sampling illustrates the damage done to equity upon the bursting of an credit binging bubble. Click any chart to enlarge (you may need to click the graphic again with your mouse to enlarge further).

Notice the loan to value ratios of the properties acquired between 2002 and 2007. What you see is the result of the CMBS bubble, with LTVs as high as 158%. At least 17 of the properties listed above with LTV’s above 100% should (and probably will, in due time) be totally written off, for they have significant negative equity. We are talking about wiping out properties with an acquisition cost of nearly $3 BILLION, and we are just getting started for this ia very small sampling of the property analysis. There are dozens of additional properties with LTVs considerably above the high watermark for feasible refinancing, thus implying significant equity infusions needed to rollover debt and/or highly punitive refinancing rates.

and the Truth as Wall Street Sees it... Wall Street Real Estate Funds Lose Between 61% to 98% for Their Investors as They Rake in Fees!

A hypothetical example easily illustrates how the financial structure of a typical real estate fund is so tilted to the advantage of the fund sponsor as to be analogous to a cost-free “Call Option” on the real estate market.

The example below illustrates the impact of change in the value of real estate investments on the returns of the various stakeholders – lenders, investors (LPs) and fund sponsor (GP), for a real estate fund with an initial investment of $9 billion, 60% leverage and a life of 6 years. The model used to generate this example is freely available for download to prospective Reggie Middleton, LLC clients and BoomBustBlog subscribers by clicking here: Real estate fund illustration. All are invited to run your own scenario analysis using your individual circumstances and metrics.

Anybody who is wondering who these investors are who are getting shafted should look no further than grandma and her pension fund or your local endowment funds…

Sourced from Zerohedge

[oklaboy]

Reggie, great job,  as usual...

[silvertrain]

Mann, Silver getting killed also..

[jbc77]

The sell volume is really picking up at a meager attempt for green.

[bugs_]

Deep Shah or Lucky Pierre?

[MsCreant]

Got your pop corn...

[contrabandista13]

You may want to read this....  It's a sign of things to come....

WikiLeaks founder has his passport confiscated

The Australian founder of the whistleblower website Wikileaks had hispassport confiscated by police when he arrived in Melbourne last week.

Julian Assange, who does not have an official home base and travels every six weeks, told the Australian current affairs program Dateline that immigration officials had said his passport was going to be cancelled because it was looking worn.

However he then received a letter from the Australian Communication Minister Steven Conroy’s office stating that the recent disclosure on Wikileaks of a blacklist of websites the Australian government is preparing to ban had been referred to the Australian Federal Police (AFP).

Ciao,

Econolicious

[Sudden Debt]

have you got any plans on leaving the country anytime soon?

[contrabandista13]

I have a nice vacation home in Zimbabwe, the land of financial stability, justice and personal freedom, where you can still short naked...

Wazz up....?

Econolicious

[Apostate]

So, perhaps he'll do some time, and come out just fine. The Australian government will just look more ridiculous in the process. 

I admit that it's disheartening. 

[jkruffin]

U.S. stocks are on the verge of complete collapse.  You can just see it coming.

[pros]

There never was a rebound-

neglible volume (down 90%) and a few large office property deals distorted the stats-

prices will continue to slide

[Postal]

This time it's different: This time it's contained. :)

[Caviar Emptor]

Yup. End of the World as we Know it Index up big this morning. Too much grit and truth. The Matrix is frayed and the 1s and 0s are becoming clearer. 

Merkel laid down the gauntlet in a Berlin speech. "This is a battle between politicians and the markets" and "I am firmly resolved....to win this battle" "The fact that hedge funds are not regulated is a scandal" "First the banks failed forcing states to carry out rescue operations....now they are speculating against these debts. That is very treacherous"

Expect the transaction tax and further regulation within days. Outright nationalization is clearly on the table if anything is deemed TBTF.