Commercial Real Estate

Tyler Durden's picture

Fed's Beige iPad Notes The Usual Regurgitated Fluff About The Economy





For those confused, the Fed's Beige Book has been upgraded to the Beige iPad (apparently Ben is not a fan of the black or white version). Regardless, the latest version has just been released spewing forth the usual reflexive platitudes, in which the economy is said to be better because the stock market is higher, and so forth. In other words, the same stuff that completely ignores $110 WTI. Via Bloomberg:

  • FED SAYS U.S. ECONOMY EXPANDED AT `MODEST TO MODERATE PACE'
  • FED SAYS CONSUMER SPENDING WAS `GENERALLY POSITIVE'
  • FED SAYS MANUFACTURING EXPANDED AT `STEADY PACE' NATIONWIDE

And more such headlines which nobody will actually read, except for the algos which scalp the optimistic tone put there precisely for such a purpose.

 
Tyler Durden's picture

Guest Post: Extend And Pretend Coming To An End





The real world revolves around cash flow. Families across the land understand this basic concept. Cash flows in from wages, investments and these days from the government. Cash flows out for food, gasoline, utilities, cable, cell phones, real estate taxes, income taxes, payroll taxes, clothing, mortgage payments, car payments, insurance payments, medical bills, auto repairs, home repairs, appliances, electronic gadgets, education, alcohol (necessary in this economy) and a countless other everyday expenses. If the outflow exceeds the inflow a family may be able to fund the deficit with credit cards for awhile, but ultimately running a cash flow deficit will result in debt default and loss of your home and assets. Ask the millions of Americans that have experienced this exact outcome since 2008 if you believe this is only a theoretical exercise. The Federal government, Federal Reserve, Wall Street banks, regulatory agencies and commercial real estate debtors have colluded since 2008 to pretend cash flow doesn’t matter. Their plan has been to “extend and pretend”, praying for an economic recovery that would save them from their greedy and foolish risk taking during the 2003 – 2007 Caligula-like debauchery.

Debt default means huge losses for the Wall Street criminal banks. Of course the banksters will just demand another taxpayer bailout from the puppet politicians. This repeat scenario gives new meaning to the term shop until you drop. Extending and pretending can work for awhile as accounting obfuscation, rolling over bad debts, and praying for a revival of the glory days can put off the day of reckoning for a couple years. Ultimately it comes down to cash flow, whether you’re a household, retailer, developer, bank or government. America is running on empty and extending and pretending is coming to an end.

 
Reggie Middleton's picture

When A Fire Sale Burns Down The Building, Bankruptcy Is Inevitable!!!





You know times are hard when you can't even give your distressed assets away!!!

 
Reggie Middleton's picture

Watch The Evidence Of Global Real Estate Travails Mount As I Find Stock to Short





Here comes the (re)crash and the search for shortable stock is on! The good thing about bankruptcy is that despite silly manilly market, bankrupt is bankrupt and the stock will act accordingly. Ask GGP/LEH investors.

 
Reggie Middleton's picture

I Present To You The First Probable US Commercial Real Estate Insolvency Of Many To Come





GGP part deux, as the hopium high sold by US regulators that allowed banks and borrowers to pretend bad loans were good wears off and reality sets in..

 
Tyler Durden's picture

Deutsche Bank Again Under Fire From Internal Whistleblower Accusing Bank Of Fudging Numbers





Back In May 2009 Zero Hedge was the only website to post (following a NYT Dealbook takedown for reasons unknown) the lament of one, now former, Deutsche Bank employee and whistleblower, Deepak Moorjani, who made it very clear that going all the way back to 2006, Deutsche Bank was allegedly fabricating data, and misleading investors about its commercial real estate holdings, courtesy of a lax regulatory strcuture and the "lack of a system of checks and balances". To wit: "At Deutsche Bank, I consider our poor results to be a “management debacle,” a natural outcome of unfettered risk-taking, poor incentive structures and the lack of a system of checks and balances. In my opinion, we took too much risk, failed to manage this risk and broke too many laws and regulations. For more than two years, I have been working internally to improve the inadequate governance structures and lax internal controls within Deutsche Bank. I joined the firm in 2006 in one of its foreign subsidiaries, and my due diligence revealed management failures as well as inconsistencies between our internal actions and our external statements. Beginning in late 2006, my conclusions were disseminated internally on a number of occasions, and while not always eloquently stated, my concerns were honest. Unfortunately, raising concerns internally is like trying to clap with one hand. The firm retaliated, and this raises the question: Is it possible to question management’s performance without being marginalized, even when this marginalization might be a violation of law?" The story was promptly drowned, despite our attempts to make it very clear just what practices the bank was engaging in in the follow up exclusive titled "One Whistleblower's Fight Against Goliath Over the Definition of Risk." Today, the questionably legal practices by Deutsche Bank are once again brought to the forefront with the Propublica article of former WSJ journalist Carrick Mollenkamp titled "Deutsche Analyst Sounded Alarm When Asked to Alter Numbers." This is the second time a pseudo-whistleblower has spoken out against an endemic culture of fraud at the German bank in two years. And nobody cares of course, for obvious reasons - the Zen-like tranquility of the status quo may never be disturbed, or else the endless crime and corruption lurking in the shadows will be exposed for all to see.

 
Reggie Middleton's picture

The Biggest Threat To The 2012 Economy Is??? Not What Wall Street Is Telling You...





Imagine pensions not paying retiree funds, insurers not paying claims, and banks collapsing everywhere. Sounds like fun? I will be discussing this live on RT's Capital Account with the lusciously locquacious Lauryn Lyster at 4:30pm.

 
Reggie Middleton's picture

Reggie Middleton Sets CNBC on F.I.R.E.!!!





Have we set the MSM on FIRE! Let's see if a trend was created. 18 hours after warning on the insurance sector, record losses were announced!!!

 
Reggie Middleton's picture

The Greatest Risk To Retail Commercial Real Estate Is? Sovereign Debt! Macro Headwinds! Popping Bubbles! Busted Banks! No, It's





The fact of the matter is that there is a very fundamental, and sparsely recognized reason for overbuilt retail commercial real estate to take a tumble - in addition to the more recognized massive headwinds.

 
Econophile's picture

Is Commercial Real Estate Recovering?





The recovery of the economy depends on several important factors, but the recovery of the real estate market is near the top of the list, especially commercial real estate (CRE) because most of America's banks are loaded down with CRE debt. Here is a current assessment of the state of the CRE market.

 
Tyler Durden's picture

Guest Post: Consumer Deleveraging = Commercial Real Estate Collapse





There is a Part 2 to the story of Consumer Deleveraging that will play out over the next decade. Consumers will deleverage because they must. They have no choice. Boomers have come to the shocking realization that you can’t get wealthy or retire by borrowing and spending. As consumers buy $500 billion less stuff per year, retailers across the land will suffer. To give some perspective on our consumer society, here are a few facts...

 
Tyler Durden's picture

Commercial Real Estate Lobby Ask For Taxpayer Aid To Help Recapitalize Banks Saddled With Billions In Underwater CRE Loans





The problem that nobody is talking about, yet everyone continues keeping a close eye on, namely the trillions in commercial real estate under water, is quietly starting to reemerge. In the attached letter from the Commercial Real Estate lobby, it reminds politicians that the hundreds of billions in loans that mature in the next several years won't roll on their own, and we see the first inkling of the lobby asking congress for much more taxpayer aid, in this case in the form of Shelley Berkley's proposed legislation to "enable banks to convert troubled loans into performing assets through modest tax incentives to attract new equity capital to existing commercial real estate projects." The letter tacitly reminds that there are thousands of regional banks whose balance sheets are chock full with underwater commercial real estate (and for the direct impact of this simply observe the 100+ banks on the FDIC's 2010 failed bank list). So in case taxpayers are wondering where the next fiscal stimulus will end up going, wonder no more: "The new investments would be specifically used to pay down debt,
resulting in lower loan-to-value ratios of existing loans as well as
improved debt coverage ratios
." As the CRE lobby concludes: "By giving lenders the ability to responsibly refinance debt and
rebalance capital reserve levels, the CRE Act will provide the
opportunity for additional lending capacity that will help stimulate
lending to small businesses, job formation and economic growth in
communities across the country." In other words, it is time for taxpayers to help purge banks of existing toxic debt, so that these same banks can resume lending like drunken sailors, in unviable commercial real estate projects just to guarantee that the next major market blow up also destroys the regional banking system, in addition to the TBTFs.

 
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