How can you eat your pudding if you don't eat your insects? | Commercial Real Estate

[Doc]

https://www.youtube.com/watch?v=7c3DUMpNVLA

43% of Small Businesses Missed April Rent

[Heracleum Persicum]

https://www.youtube.com/watch?v=7c3DUMpNVLA

43% of Small Businesses Missed April Rent

.

Rents too high

Vacancy must rise so that rents come down
.

[Doc]

https://www.youtube.com/watch?v=7c3DUMpNVLA

43% of Small Businesses Missed April Rent

.

Rents too high

Vacancy must rise so that rents come down
.

IF the rents are reduced the Building owner's credit rating is also reduced, and the value of the building goes down when applying for a refinance loan (every 5 years or so). If the existing loan is for more than the new value of the building then either no new loan, or the owner has to immediately pay the difference.

[Heracleum Persicum]

https://www.youtube.com/watch?v=7c3DUMpNVLA

43% of Small Businesses Missed April Rent

.

Rents too high

Vacancy must rise so that rents come down
.

IF the rents are reduced the Building owner's credit rating is also reduced, and the value of the building goes down when applying for a refinance loan (every 5 years or so). If the existing loan is for more than the new value of the building then either no new loan, or the owner has to immediately pay the difference.

The owners were mistaken to buy the properties at asking prices .. low interest rates fooled buyers buying based on market caps that the real rent did not support

Yes, owners will lose money so the lenders .. renters can not pay for mistake owners and lenders did

There ZERO doubt that all commercial real estate prices will dramatically correct , for many reason .. High interest rates will stay with us for generation, consumers will retreat as inflation will eat at their purchasing power, shopping habits changing rapidly, new generation less shopping addict etc etc

Commercial property owners should sell as long as they can

Dont hold your breath
.

[Doc]

https://www.youtube.com/watch?v=7c3DUMpNVLA

43% of Small Businesses Missed April Rent

.

Rents too high

Vacancy must rise so that rents come down
.

IF the rents are reduced the Building owner's credit rating is also reduced, and the value of the building goes down when applying for a refinance loan (every 5 years or so). If the existing loan is for more than the new value of the building then either no new loan, or the owner has to immediately pay the difference.

The owners were mistaken to buy the properties at asking prices .. low interest rates fooled buyers buying based on market caps that the real rent did not support

Yes, owners will lose money so the lenders .. renters can not pay for mistake owners and lenders did

There ZERO doubt that all commercial real estate prices will dramatically correct , for many reason .. High interest rates will stay with us for generation, consumers will retreat as inflation will eat at their purchasing power, shopping habits changing rapidly, new generation less shopping addict etc etc

Commercial property owners should sell as long as they can

Dont hold your breath
.

Some are selling There are buildings in San Francisco that are selling with a 90% discount from just 2 or 3 years ago.

[Typhoon]

From what I've read, many lenders are adopting an "extend and pretend*" a.k.a. "kicking the can down the road" position, hoping that the CRE market recovers.

*Extend and pretend is a strategy used by lenders in commercial real estate to defer risks or costs into the future. It applies to a loan that is approaching or has reached maturity, but the value of the underlying property has declined since the loan was made. The lender extends the maturity date on a borrower’s loan, allowing owners to pretend the value of the property hasn’t diminished.

[Doc]

From what I've read, many lenders are adopting an "extend and pretend*" a.k.a. "kicking the can down the road" position, hoping that the CRE market recovers.

*Extend and pretend is a strategy used by lenders in commercial real estate to defer risks or costs into the future. It applies to a loan that is approaching or has reached maturity, but the value of the underlying property has declined since the loan was made. The lender extends the maturity date on a borrower’s loan, allowing owners to pretend the value of the property hasn’t diminished.

Yeah that is what the banks are doing. It won't work and will only extend the pain. It is probably why the economy hasn't crashed already. After the the housing market will crash everywhere it hasn't crashed already. Interest rates are going to stay high for a very long time no matter what the Fed does.