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I made a post about commercial mortgage earlier back in Jan-2009. Clearly indicating trouble brewing in that sector post was made in Jan. Please feel free
to read this report. I had put in a lot of work scraping news articles off the net to make that post.

http://www.diwakars.com/wordpress/2009/01/next-shoe-to-drop/

But we are now in June almost 5 months have gone by so has the market improved for commercial real estate ? May be there are some green shoots here…let us have a look….let us check since Feb-09 as my earlier post was made in Jan.

Insurers’ Corporate-Bond Losses May Exceed Subprime (Update2)
By Andrew Frye

Feb. 3 (Bloomberg) — Corporate debt defaults may cost U.S. life insurers “substantially” more than losses on securities linked to subprime, Alt-A and commercial mortgages, said Eric Berg, an analyst at Barclays Plc.

Corporate defaults are poised for a “significant” increase this year as the recession deepens, Berg, based in New York, said in a research note yesterday.

The American Council of Life Insurers estimated the industry, led by MetLife Inc. and Prudential Financial Inc., holds $1 trillion in corporate debt.
“None of the life insurers we studied appear to be doing a particularly good job” of picking bonds backed by companies, Berg said. “Understandably, investors
are concerned.”

Bank Failures May Reach 1,000 on Bad Loans, RBC Says (Update2)
By David Mildenberg and Margaret Chadbourn
Feb. 9 (Bloomberg) — As many as 1,000 U.S. banks may fail in the next three to five years, almost double the one-year tally at the height of the saving-and
-loan collapse, as losses mount on commercial real-estate loans, RBC Capital Markets analysts said.

Wall Street Banks Vacate Towers Pushing Empty Space to Record
By David M. Levitt
Feb. 26 (Bloomberg) — New York’s biggest banks and securities firms may relinquish 8 million square feet of office space this year, deepening the worst
commercial property slump in more than a decade as they abandon a record amount of property.

JPMorgan Chase & Co., Citigroup Inc., bankrupt Lehman Brothers Holdings Inc. and industry rivals have vacated 4.6 million feet, a figure that may climb by
another 4 million as businesses leave or sublet space they no longer need, according CB Richard Ellis Group Inc., the largest commercial property broker.

Banks, brokers and insurers have fired more than 177,000 employees in the Americas as the recession and credit crisis battered balance sheets. Financial
services firms occupy about a quarter of Manhattan’s 362 million square feet of office space and account for almost 40 percent now available for sublease, CB
Richard Ellis data show.

Geithner’s Plan May Not Save Commercial Real Estate (Update1)
By Bob Ivry and Jonathan Keehner
Feb. 12 (Bloomberg) — Treasury Secretary Timothy Geithner’s financial stability plan may come too late to rescue the commercial property market, which is
following housing into a slump.
Lending has dried up as $171 billion of commercial mortgages held by non-bank investors come due in 2009, according to the Mortgage Bankers Association.
Issuance of commercial mortgage- backed securities, which supply cash for lenders to make more loans, fell 95 percent in 2008, according to JPMorgan Chase & Co. Geithner wants to expand an existing federal lending program to buy the securities and spark loan-making.

“CMBS is a four-letter word,” said William Acheson, who tracks apartment real estate investment trusts for the Benchmark Co. LLC in New York. “The Treasury
plan gets questionable paper off questionable financial institutions’ books, but it will take an awful lot more confidence for people to come back to securitized mortgage pools.”

Commercial property under pressure across US
By Alan Rappeport and Nicole Bullock in New York
Published: March 5 2009 21:06 | Last updated: March 5 2009 21:06
Ben Bernanke, chairman of the Federal Reserve, this week called commercial property a “looming crisis” – but for Shawn O’Brien, a commercial broker in
Lansing, Michigan, the crisis has already arrived.

Defaulting Commercial Properties Hit Banks on Vacancy-Rate Rise
By Ari Levy and Daniel Taub

March 23 (Bloomberg) — U.S. banks, battered by record losses from the worst housing slump since the Great Depression, now must weather increasing loan delinquencies from owners of skyscrapers and shopping malls.

The country’s 10 biggest banks have $327.6 billion in commercial mortgages, which face a wave of defaults as office vacancies grow and retailers and casinos go bankrupt. A projected tripling in the default rate would result in losses of about 7 percent of total unpaid balances, according to estimates from analysts at research firm Reis Inc.

Soros Says Commercial Property Values Will Fall 30% (Update1)
By Michael Forsythe

March 26 (Bloomberg) — Billionaire investor George Soros said U.S. commercial real estate will probably drop at least 30 percent in value, causing further strains on banks.

“Commercial real estate has not yet fallen in value,” Soros, speaking at a forum in Washington, said. “It is inevitable, it is written, everybody knows it, there are already some transactions which reflect and anticipate it, so we know, they will drop at least 30 percent.”

Commercial real estate loan defaults skyrocket
The Associated Press
Published: March 26, 2009

WASHINGTON: With loan defaults rising, analysts say the struggling commercial real estate industry is poised to fall into the worst crisis since the last great property bust of the early 1990s.

Delinquency rates on loans for hotels, offices, retail and industrial buildings have risen sharply in recent months and are likely to soar through the end of 2010 as companies lay off workers, downsize or shut their doors.
The commercial real estate market’s fortunes are tied closely to those of the sinking economy, especially unemployment, which hit 8.1 percent in February.

Fed’s Lockhart Warns of Commercial Real Estate Ills (Update1)
By Steve Matthews and Jerry Hart

March 4 (Bloomberg) — Federal Reserve Bank of Atlanta President Dennis Lockhart said falling property values and other problems in commercial real estate may worsen prospects for U.S. banks facing losses from tumbling home prices.

“Declining commercial real estate markets could put further pressure on already strained financial institutions and markets,” Lockhart said today in a speech in Miami. “And overcoming problems in the financial sector is central to achieving economic recovery.”

Lockhart’s comments echoed Fed Chairman Ben S. Bernanke, who warned in testimony to the Senate Budget Committee yesterday about a “looming crisis in commercial real estate” as owners of shopping centers, hotels and other buildings face difficulty refinancing debts.

April 8 (Bloomberg) -- The Federal Reserve may offer investors longer-term loans at higher interest rates to buy commercial mortgage-backed securities, aiming to protect the central bank’s balance sheet while acceding to an industry plea.

Lobbyists in the commercial mortgage-backed securities industry say the Fed needs to provide loans of at least five years, rather than the current three-year limit, to avert a meltdown in the market. Fed officials, wary of granting the request outright, are considering a compromise in altering terms of its $1 trillion emergency-lending program.

Commercial mortgages at risk

By Saskia Scholtes in New York Published: April 28 2009 23:31 | Last updated: April 28 2009 23:31

The volume of commercial mortgages at risk of default has quintupled since the beginning of 2008 as a deteriorating economy has made it increasingly difficult for shops and businesses to keep up with their payments.

Special servicers, companies that collect payments from borrowers in distress on behalf of mortgage bond investors, reported $23.7bn of mortgages under their care at the end of the first quarter, according to Fitch Ratings.

Fed’s Bear Losses Dominated by Commercial Real Estate (Update2)
By Scott Lanman

April 23 (Bloomberg) — The Federal Reserve released its most detailed breakdown to date on the types of assets it accepted from Bear Stearns Cos. a year ago and the cause of losses on the portfolio.

The biggest losses in the $25.7 billion portfolio of Bear Stearns assets as of the end of last year came from commercial and residential mortgages, according to a report released by the Fed in Washington today. The central bank agreed in March 2008 to buy the assets so JPMorgan Chase & Co. would acquire Bear Stearns and avert the investment bank’s bankruptcy.

“It’s just the tip of the iceberg when it comes to losses in the commercial real estate market,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. Lenders “were over-optimistic about tenant occupancy rates and rents,” he said.
About 9.3 percent of the commercial mortgages and 23 percent of the residential mortgages were nonperforming, the Fed said.

Sounds like taste of ’sewage’ (..dman ‘that’ thing comes to mind again but lets move on) Feds got….from commercial mortgage market. Then right after on May-1st in order to avoid further tasting of ’sewage’ a loan facitlity was extended for commercial real estate sector.

Fed to Allow Longer Loans for Commercial Real Estate (Update3)
By Scott Lanman

May 1 (Bloomberg) — The Federal Reserve authorized longer- term loans for investors buying securities backed by commercial mortgages in a $1 trillion emergency credit program, taking a step the industry said was needed to avert defaults.

Beginning in June, the Fed will offer five-year loans at higher interest rates than the three-year loans previously approved for the Term Asset-Backed Securities Loan Facility, the central bank said today in a statement from Washington. The Fed will also accept securities backed by loans designed to help small businesses buy insurance.

After reading all this I don’t see any greenshoot in this sector, Feds don’t see it….may be you do who knows…I have more banks on my side…

Bankers see more losses ahead
Credit cards, commercial real estate are just two trouble spots in 2009, Fed survey of loan officers reveals.
By David Ellis, CNNMoney.com staff writer
Last Updated: May 4, 2009: 3:37 PM ET

NEW YORK (CNNMoney.com) — Bankers are bracing for additional losses this year across a wide variety of loan categories, according to a report published Monday by the Federal Reserve, as the nation continues to suffer under the weight of a painful recession.

In the central bank’s latest survey of loan officers, more than 90% of domestic lenders warned of further deterioration across such loan portfolios as credit cards, commercial real estate and non-traditional mortgages.

– OK so there you have it…housing loan, commericial real estate and throw in the mix credit card loan defaults..but hey banks are making profit.

MetLife Says Commercial Mortgage Defaults Will Rise (Update2)
By Andrew Frye, Carol Massar and Hugh Son

June 10 (Bloomberg) — MetLife Inc. Chief Investment Officer Steven Kandarian said commercial mortgage defaults will rise in the next two to three years after the economic slump subsides.

“The worst is to come,” Kandarian said in an interview today with Bloomberg Television in New York, where the biggest U.S. life insurer is based. “Typically

there’s a lag between when the economy softens and when the defaults actually occur.”

- Are you seeing Greenshoots in these sector ? Banking/Commerical realestate/ Insurenace (all commerical and housing propertis are insured)/Credit cards ?

Any way why stop here go on explore more sectors. Click here to return to main article.

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