12/08/09 Stockholm, Sweden – The residential real estate market has seen several ups and downs since its collapse, but those gyrations are nothing compared to the likely fallout of a bust in the commercial real estate market.
Zero Hedge has rounded up 15 properties with an aggregate current loan balance of over $3 billon, any one of which could be the first domino to fall:
“And even though everyone “knows” the state of commercial real estate is in free fall, few have been able to pin it down to specific buildings, as property-level data is still very expensive and more often than not, proprietary. In order to bring the full degree of CRE collapse closer to home, and to provide some leads to our MSM-originating readers, we present a detailed analysis of some of the most impacted CRE properties that have yet to make headline news. For that purpose we combed through BarCap’s CMBS remittance data for CMBX 4 (2007 vintage), which is broadly considered the peak year for commercial real estate deals and also the very peak of the housing bubble. We expected to find some of the juiciest CRE failures to be in this loan set. We were not disappointed.”
See the list of the properties, with pictures, in Zero Hedge’s coverage of the next shoes to drop in commercial real estate.
Rocky Vega
Rocky Vega is a regular contributor to The Daily Reckoning. Previously, he was founding publisher of UrbanTurf and RFID Update, which he operated from Brazil, Chile, and Puerto Rico, and associate publisher of FierceFinance. He specialized in direct marketing at MBI, facilitated MIT Sloan School of Management programs, and has been featured on CBS. Vega graduated with honors from Harvard University, where he was on the board of Let’s Go Publications and directed business programs involving McKinsey, Goldman Sachs, and Harvard Business School faculty. He is also enrolled at the Stockholm School of Economics.
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These 15 properties have an average loan balance of 200 million dollars. I don’t dismiss the possibility of a commercial real estate melt down but how does a two hundred million dollar default start the collapse of a 6 trillion dollar commercial real estate market with 3 trillion of debt?