Walking Away Getting More Ink

By way of Calculated Risk, Diana Olick's latest article on Strategic Defaults:

The lead story in commercial real estate today is the dynamic duo of Tishman Speyer and BlackRock walking away from Stuyvesant Town and Peter Cooper Village in Manhattan. The two have been trying to refi $4.4 billion in debt on the 11,200-apartment property, to no avail. So now they're handing over the keys to the lenders.

The joint venture bought the property at the height of the market for $5.4 billion. Now, thanks to falling values in commercial and residential real estate, it's worth about $2 billion.

Here's the quote from the venture: "The only viable alternative to bankruptcy would be to transfer control and operation of the property, in an orderly manner, to the lenders and their representatives." [That's a nice way of saying: WALK THE HELL AWAY]

This news comes on the heels of Morgan Stanley walking away from its commercial mortgage commitments on five buildings out in San Francisco.

Apparently it's just good business.

So why is it not just good business for homeowners to walk away from their mortgages? Borrowers are looking at the same negative equity and loss on investment, simply on a smaller scale. At least that's the running argument. Somehow it's fine for commercial investors, but not for individuals?

...

Some folks argue that home mortgage walkaways are destroying the housing market by pushing up the number of foreclosures, which in turn drive down the value of the homes around them. I'm sure the same argument can be made in the commercial real estate market. Massive defaults only push commercial values down further and in turn make it even harder for the next investor to get credit.

Oh, but that's just a company and a building, not a person, right?

Well, think about the other investors in that commercial property. One of the big investors in Stuyvesant Town and Peter Cooper Village is the California Public Employees Retirement System.

They, I believe, hold an awful lot of regular folks' retirements.

Actual people.

Comments

Post a Comment

Popular posts from this blog

20 Ways to Rent Out Your Home Faster

Image
While running a successful rental marketing company and renting out my numerous rental properties. I have picked up a few tricks along the way. Below are 20 ways you can rent out your home faster  (There are plenty more ideas and if you have some please comment and I can add to the list): 1) Pricing Matters There are many ways to price your home competitively in the marketplace. Some tools to help you along the way are: RentSlicer.com, RentOmeter.com and Oodle.com 2) The time of the Month Counts The best times to gain a tenant are March, April, May, June, July and August. These are the main months when renters move due to seasons, schools, etc. 3) Throw some Make-up On Have you ever toured a model home for sale? What do you notice? Are there magnets on the fridge? Are there clothes in the hamper? Are the walls scratched? The answer is no. Why? This is what sells homes. Touch up with paint and remove all clutter and you will see a big difference. 4) Replace Light bulbs and Fixtures ...
Read more

Skaneateles Real Estate - The Weekly Update

Here we go! It's the start of something big! Currently, in the Skaneateles area of the multiple listing service there are 160 homes active on the market. This number seems to have held steady over the past few weeks, while the number of homes marked contingent or pending has increased slightly. Of the 6 new homes that have come on the market, 2 are re-lists and 3 are waterfront. Waterfront continues to sell and do very well this year. There are also 3 properties marked contingent this past week: 1 residential, 1 waterfront, and 1 for the die-hard investor who got a good deal, I think. The price had come down steadily - until it's last listing was about 60 % of the original price. There are now 30 closed properties this year. The latest is a village property which sold at a reduction of 12% of its original price. Last week I wondered about reducing all homes by 10% to sell them - and I think this is in part a validation of that assumption. I had a wonderful comment about ...
Read more

Skaneateles Real Estate - The Weekly Update

Image
Last Friday I returned from Manhattan in the morning.  I had just gone down on Thursday morning planning to come back the same night, but I was concerned about the flooding I had seen on the drive.  I stayed over, got a quick walk in on Riverside, then started home.  I flew out of the city easily - the Henry Hudson is so fast and uncomplicated in the morning! - but found myself sitting in traffic on 81 in Binghamton.  I listened to the reports:  the Governor was somewhere in a helicopter overhead, there were photos apparently of just the tip of the golden arches of some McDonald's restaurant somewhere, the water had crested but was threatening the structure of bridges.  I heard Owego was hard hit, and thought of Adam Weitsman's business (see http://www.syracuse.com/ for updates on this and his response).  I can't stand sitting in traffic, so I turned off and took Route 11 until I lost it somewhere in the country.  I stopped along the way at a sma...
Read more