Private REITs Hide Commercial Real Estate Distress While Begging for Bailoutsmises.org/mises-wire/private-reits-hide-commercial-real-estate-distress-while-begging-bailouts
272 sats \ 7 comments \ @Undisciplined 4 Mar econ
zaps forwarded to @grayruby (10%)
By Artis Shepherd
The Fed-launched real estate bubble did not just create havoc in residential markets, but also has distorted the commercial real estate market, too. And it is getting worse.
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27 sats \ 3 replies \ @ablunderfilledlife 5 Mar
Continued investor redemptions coupled with potential negative developments in the capital markets—particularly a resurgence of consumer price inflation and a reassessment of rate cut expectations—could set off a doom loop, where investors rush to redeem their shares while prices are artificially inflated, encouraging others to do the same, ultimately resulting in a chaotic run.
REIT managers are keenly aware of this possible outcome. To combat it, they have deployed the true extent of their talents—lobbying the government and Federal Reserve for special privileges and bailouts.
I can't imagine what else the managers can do.
For many investors in REITS, their money is locked down for a specific amount of time. I wonder what the average time is and how close we are to them being able to pull their funds.
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20 sats \ 2 replies \ @Undisciplined OP 5 Mar
This issue wasn't on my radar until recently, but there's been a lot of talk about it lately. It is surprising to me that such a slow moving disaster could really be such a big problem.
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37 sats \ 1 reply \ @ablunderfilledlife 5 Mar
Am I way off and thinking that this is pretty similar to what happened in 2008, maybe not in scale but in structure?
Like CDOs, REITs are made up of tranches of mortgage obligations (Plus management, capex, and other fees), and the issue seems to be coming from bad faith valuations.
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10 sats \ 0 replies \ @Undisciplined OP 5 Mar
Probably, the big brain finance people think a lot of themselves and are prone to repeating mistakes.
I think there are some really bad fundamental problems in the commercial real estate sector that were going come up either way. Demand for commercial real estate has cratered since Amazon came along, but city zoning laws create an enormous friction that prevents market forces from reallocating that real estate to other uses.
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10 sats \ 0 replies \ @Car 4 Mar
few
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0 sats \ 0 replies \ @grayruby fwd 5 Mar
Thanks for the equity.
I talked to someone from CBRE after our last commercial real estate conversation and he said vacancy is still an issue, renewals have been strong but they have had difficulty renting vacant spaces without making significant concessions or dramatic alteration to the spaces.
He said overall business is ok, they are doing extremely well in Data centre and other specialty industrial and struggling with traditional office and retail.
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0 sats \ 0 replies \ @SaToSHiWoMaN 4 Mar outlawed
stackers have outlawed this. turn on wild west mode in your /settings to see outlawed content.