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If u think Tiongkok Property Crisis is big....maybe u need to look at the 20trillion mis-pricing US commerical property
- Thread starter k1976
- Start date
https://www.bloomberg.com/news/arti...s-20-after-bank-forecasts-loss-on-us-property
Japan’s Aozora Bank Ltd. became the second lender in a span of hours to surprise investors with losses tied to US commercial property, sending shares down by the limit and heightening concern over global banks’ exposure to souring real estate bets.
The Tokyo-based bank, Japan’s 16th biggest by market value, said it expects to post a net loss of 28 billion yen ($191 million) for the fiscal year, compared with its previous forecast of a 24 billion yen profit. Shares sank more than
US Property Losses Trigger 20% Drop in Japanese Bank Aozora
- Aozora follows NYCB in reporting property losses in the US
- US commercial property market has been hit by rising rates
Japan’s Aozora Bank Ltd. became the second lender in a span of hours to surprise investors with losses tied to US commercial property, sending shares down by the limit and heightening concern over global banks’ exposure to souring real estate bets.
The Tokyo-based bank, Japan’s 16th biggest by market value, said it expects to post a net loss of 28 billion yen ($191 million) for the fiscal year, compared with its previous forecast of a 24 billion yen profit. Shares sank more than
https://finance.yahoo.com/news/international-monetary-fund-sounds-warning-171529186.html
Many of the businesses that survived adapted to COVID by going to a remote work policy for much of their workforce. Both these factors had a major impact on office vacancy rates, which are averaging an all-time high of around 19% nationwide. Annual revenue from rental income is one of the main metrics used to value commercial real estate, and most buildings can't make money when occupancy falls below 95%.
An average occupancy rate in the 80% range means a typical office building is not only failing to make money for its investors, but it's also not making enough money to service the property debt. The IMF cites an American Mortgage Federation study showing that America has $1.3 trillion in outstanding commercial mortgage debt that will come due in 2024. Roughly 25% of that is concentrated in the office and retail sector.
High Vacancy Rates, Changing Work Culture And A Mountain Of Debt
Rising interest rates have hurt U.S. commercial property value, but the cost of financing is hardly the only specter haunting the commercial sector. Office properties have the most exposure to the economic situation, and this is largely because of a combination of unforeseen circumstances. The COVID-19 crisis devastated the U.S. economy and caused many businesses to shut their doors permanently.Many of the businesses that survived adapted to COVID by going to a remote work policy for much of their workforce. Both these factors had a major impact on office vacancy rates, which are averaging an all-time high of around 19% nationwide. Annual revenue from rental income is one of the main metrics used to value commercial real estate, and most buildings can't make money when occupancy falls below 95%.
An average occupancy rate in the 80% range means a typical office building is not only failing to make money for its investors, but it's also not making enough money to service the property debt. The IMF cites an American Mortgage Federation study showing that America has $1.3 trillion in outstanding commercial mortgage debt that will come due in 2024. Roughly 25% of that is concentrated in the office and retail sector.
Smaller Regional Banks Have Increased Exposure
The IMF is concerned that much of the debt on America's commercial real estate loans is held in mortgages from small, regional banks as well as commercial mortgage-backed securities. So far, it has not signaled that a collapse like the residential real estate loan crisis of 2008 is imminent, but its warning offers a sobering and frightening look at the future of U.S. commercial real estate.
https://www.theatlantic.com/ideas/a...cial-real-estate-crisis-empty-offices/674310/
By Dror Poleg
“I’m about to cancel all my Zoom meetings.” It was May 2021, and Jamie Dimon had had enough. The JPMorgan Chase CEO expected that “sometime in September, October,” the company’s office would “look just like it did before.” Two years later, his company is slashing its Manhattan footprint by a fifth.
Post-pandemic, kids are back in school, retirees are back on cruise ships, and physical stores are doing better than expected. But offices are struggling perhaps more than most casual observers realize, and the consequences for landlords, banks, municipal governments, and even individual portfolios will be far-reaching. In some cases, they will be catastrophic. But this crisis, like all crises, also represents an opportunity to reconsider many of our assumptions about work and cities.
The Next Crisis Will Start With Empty Office Buildings
Commercial real estate is losing value fast.By Dror Poleg
“I’m about to cancel all my Zoom meetings.” It was May 2021, and Jamie Dimon had had enough. The JPMorgan Chase CEO expected that “sometime in September, October,” the company’s office would “look just like it did before.” Two years later, his company is slashing its Manhattan footprint by a fifth.
Post-pandemic, kids are back in school, retirees are back on cruise ships, and physical stores are doing better than expected. But offices are struggling perhaps more than most casual observers realize, and the consequences for landlords, banks, municipal governments, and even individual portfolios will be far-reaching. In some cases, they will be catastrophic. But this crisis, like all crises, also represents an opportunity to reconsider many of our assumptions about work and cities.
good, all very good....another perfect storm brewing....
https://www.bloomberg.com/news/arti...state-s-extend-and-pretend-is-on-shaky-ground
The high chieftains of real estate finance flocked to the Marriott Marquis in New York’s Times Square in June at a precarious moment for their business. Commercial property transactions were stalled, squelching demand for new loans. And loans made during the mid-pandemic go-go days, when the world was high on government stimulus money, needed fixing. Yet many conferencegoers were upbeat, trading notes on a surprisingly resilient economy and the media’s tendency to exaggerate the challenges. An after-party at Cipriani was “an absolute zoo,” says Toby Cobb, a managing partner at lender 3650 REIT, as if the industry were operating at peaks last seen in 2006.
It’s not that the market participants had forgotten the lessons of the global financial crisis that followed the 2000s boom. It’s that they remembered them. Faced with delinquent loan payments, lenders decided to be patient: Instead of foreclosing on properties whose value was plummeting, they lengthened loan terms and ignored short-term valuations. They called it “extend and pretend,” and it worked so well that when Covid-19 brought the global economy to a halt in March 2020, they turned to it again. A rolling loan, they said, gathers no loss.
Have a confidential tip for our reporters? Get in Touch
http://bloom.bg/dg-ws-core-bcom-m1
The ‘Extend and Pretend’ Real Estate Strategy Is Running Out of Time
Higher interest rates and soaring vacancies have brought the commercial property industry to the brink.The high chieftains of real estate finance flocked to the Marriott Marquis in New York’s Times Square in June at a precarious moment for their business. Commercial property transactions were stalled, squelching demand for new loans. And loans made during the mid-pandemic go-go days, when the world was high on government stimulus money, needed fixing. Yet many conferencegoers were upbeat, trading notes on a surprisingly resilient economy and the media’s tendency to exaggerate the challenges. An after-party at Cipriani was “an absolute zoo,” says Toby Cobb, a managing partner at lender 3650 REIT, as if the industry were operating at peaks last seen in 2006.
It’s not that the market participants had forgotten the lessons of the global financial crisis that followed the 2000s boom. It’s that they remembered them. Faced with delinquent loan payments, lenders decided to be patient: Instead of foreclosing on properties whose value was plummeting, they lengthened loan terms and ignored short-term valuations. They called it “extend and pretend,” and it worked so well that when Covid-19 brought the global economy to a halt in March 2020, they turned to it again. A rolling loan, they said, gathers no loss.
Have a confidential tip for our reporters? Get in Touch
http://bloom.bg/dg-ws-core-bcom-m1
八方藏刀，四面楚歌，十面埋伏，九死一生
https://www.reuters.com/markets/us/...ord-5-trillion-options-expiration-2023-12-12/
December 13, 20238:56 AM GMT+8Updated 2 months ago
NEW YORK, Dec 12 (Reuters) - Dealers squaring their books ahead of an options expiration that is set to be the largest on record for S&P 500-linked derivatives may be helping to tamp down swings in U.S. stocks, market participants said.
Some $5 trillion in U.S. stock options are set to expire on Friday, 80% in S&P 500-linked contracts - the largest such expiration in at least 20 years - according to Asym500 MRA Institutional, a unit of derivatives strategy and execution firm Macro Risk Advisors.
While such events can exacerbate volatility, strategists say market participants’ behavior ahead of the upcoming expiration has been muting stock gyrations and may be one reason equities have traded in a tight range over the last few weeks.
The S&P 500 (.SPX), opens new tab is up 21% this year, following a nearly 13% rally from its October lows. More recently, however, market moves have been subdued.
The benchmark index has not logged a greater than 1% move in either direction for 19 straight sessions, the longest such streak since early August. At the same time, the Cboe Volatility Index (.VIX), opens new tab stands at 12.07, a near 4-year low.
Another example of the market's sluggish trading can be found in the 10-day realized volatility for the S&P 500, which is how much the index has swung over the last 10 sessions.
Why are US stocks sluggish? Some blame a looming $5 trillion options expiration
By Saqib Iqbal AhmedDecember 13, 20238:56 AM GMT+8Updated 2 months ago
NEW YORK, Dec 12 (Reuters) - Dealers squaring their books ahead of an options expiration that is set to be the largest on record for S&P 500-linked derivatives may be helping to tamp down swings in U.S. stocks, market participants said.
Some $5 trillion in U.S. stock options are set to expire on Friday, 80% in S&P 500-linked contracts - the largest such expiration in at least 20 years - according to Asym500 MRA Institutional, a unit of derivatives strategy and execution firm Macro Risk Advisors.
While such events can exacerbate volatility, strategists say market participants’ behavior ahead of the upcoming expiration has been muting stock gyrations and may be one reason equities have traded in a tight range over the last few weeks.
The S&P 500 (.SPX), opens new tab is up 21% this year, following a nearly 13% rally from its October lows. More recently, however, market moves have been subdued.
The benchmark index has not logged a greater than 1% move in either direction for 19 straight sessions, the longest such streak since early August. At the same time, the Cboe Volatility Index (.VIX), opens new tab stands at 12.07, a near 4-year low.
Another example of the market's sluggish trading can be found in the 10-day realized volatility for the S&P 500, which is how much the index has swung over the last 10 sessions.
https://theedgemalaysia.com/node/695819
Jan 2): Jitters about South Korea’s credit market extended into Tuesday, with bank and developer shares sliding and JPMorgan Chase & Co warning of insolvency risks for financial firms and developers due to real estate exposure.
Leading the drop among lenders was Shinhan Financial Group Co, which recorded its biggest intra-day decline in a year. Shares of builders including Samsung Engineering Co Ltd also retreated.
Shinsegae Engineering & Construction Co bonds dropped by the most since October, according to Bloomberg-compiled data.
Investors are on edge after builder Taeyoung Engineering & Construction last week announced plans to reschedule its debt, reigniting concerns about a 2022 credit crunch triggered by the default of a property developer on debt for project financing.
Bank of Korea governor Rhee Chang-yong warned in a New Year’s speech of the risk of financial instability due to the central bank’s restrictive monetary policy.
“Given a prolonged high rate interest environment, we expect that some mid-to-small sized non-bank lenders and/or developers are likely to go insolvent,” JPMorgan analyst Jihyun Cho wrote in a note.
“Asset quality issue remains the key agenda item for the financial industry as non-bank lenders may face more challenging situations.”
Jan 2): Jitters about South Korea’s credit market extended into Tuesday, with bank and developer shares sliding and JPMorgan Chase & Co warning of insolvency risks for financial firms and developers due to real estate exposure.
Leading the drop among lenders was Shinhan Financial Group Co, which recorded its biggest intra-day decline in a year. Shares of builders including Samsung Engineering Co Ltd also retreated.
Shinsegae Engineering & Construction Co bonds dropped by the most since October, according to Bloomberg-compiled data.
Investors are on edge after builder Taeyoung Engineering & Construction last week announced plans to reschedule its debt, reigniting concerns about a 2022 credit crunch triggered by the default of a property developer on debt for project financing.
Bank of Korea governor Rhee Chang-yong warned in a New Year’s speech of the risk of financial instability due to the central bank’s restrictive monetary policy.
“Given a prolonged high rate interest environment, we expect that some mid-to-small sized non-bank lenders and/or developers are likely to go insolvent,” JPMorgan analyst Jihyun Cho wrote in a note.
“Asset quality issue remains the key agenda item for the financial industry as non-bank lenders may face more challenging situations.”
Sg is worse sinkies kumlan with pigeon holes
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