[HN Gopher] Landlords Face a $1.5T Commercial Real Estate Maturi...
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Landlords Face a $1.5T Commercial Real Estate Maturity Wall
Author : petethomas
Score : 37 points
Date : 2024-08-31 21:15 UTC (1 hours ago)
(HTM) web link (www.bloomberg.com)
(TXT) w3m dump (www.bloomberg.com)
| client4 wrote:
| https://archive.is/PEdw7
| breckenedge wrote:
| Hoping that this leads to lower rents in many places in the U.S..
| Coupled with a multifamily construction boom, there should be a
| glut of nice, new apartments for rent.
| mcs5280 wrote:
| They will be bailed out before rents are allowed to decrease.
| Number only goes up now
| devjab wrote:
| A lot of these projects are financed with rent projections as
| part of their valuation to lock in loans and attract investors.
| So lowering rent wouldn't be an option as it would make the
| problem worse.
|
| I think the most likely outcome is that the various investment
| banks and their lenders will come to agreements on loans. If
| the problem gets too big the various governments will bail them
| out, but most likely a few will buckle and have their projects
| picked up by others with no real change happening.
|
| If you want cheaper rent you're going to need political
| intervention.
| kaonwarb wrote:
| If you want cheaper rent you're going to need more housing.
|
| If political intervention leads to more housing, great.
| washadjeffmad wrote:
| Occupancy rates for MFDs that used RealPage are still below
| the historical failure thresholds. The only problem lower
| rents would create is reducing the return for investors.
|
| If the government only bails out small landlords, that's
| fine, otherwise it'll open up the market to complete capture
| by large investors.
| lotsofpulp wrote:
| > A lot of these projects are financed with rent projections
| as part of their valuation to lock in loans and attract
| investors
|
| I would like to see proof of this. All the commercial backed
| mortgages I have been privy to come with debt service
| coverage ratios, which can trigger default if total cash flow
| is not as expected.
|
| Some rent is always more than no rent. Lenders aren't fooled
| by property owners earning less money, but advertising higher
| than market rate rents to prospective tenants.
|
| https://www.investopedia.com/terms/d/dscr.asp
|
| The only question is if the lender wants to trigger the
| default and take over dealing with the property, and many
| times they don't, and prefer to renegotiate the terms of the
| loan.
| Retric wrote:
| Banks aren't in need of government bailouts here the 1.5T is
| more for shock value than an actual issue. "$95 billion of
| the US properties in distress _or at risk of becoming so_ "
|
| If hypothetically 50B in loans goes bad that's a minor issue
| spread across the industry.
| Terr_ wrote:
| The millenial's prayer: "Please let the real-estate market crash
| in some way that doesn't affect my buying power, amen."
| exe34 wrote:
| i think at this point a lot of us just want to watch it burn so
| that we all get to suffer together for once.
| cyberax wrote:
| Good. Hopefully, inner cities will die off for good, giving a
| boost to remote work and comfortable suburban housing.
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