Alexandria Real Estate Equities, Inc.Viés de baixa
#FED causing Commercial Real Estate/ Banking Collapse
Atualizado
Commercial real estate
"..talk of black swans of an economic nature forcing the Fed to print trillions again. Commercial real estate may be the next domino to fall. Back in 2008, default rates rose to 9%, up from 1%, as interest rates rose.
Today, the damage to commercial real estate loans which total about $2.7 trillion could be far greater. Over 40% of the US work force now works remotely since May 2020. The decline in demand for commercial properties has worsened by recent tech layoffs. The value of office sector REITs have fallen by about 55% which translates into a 33% reduction in the value of office buildings.
The default rate of between 10-20% in commercial real estate which was the lower end seen during the worst of 2008 would result in about $80-160 billion in additional bank losses. This would be ruinous for hundreds of smaller and midsize regional banks that have already been weakened by higher interest rates. The 2008 financial crisis spread from the housing sector to the rest of the economy as large banks with exposure to housing took tremendous losses.
Today, the Fed has created a moral hazard in guaranteeing depositors. Bank executives may take bigger risks if they believe the Fed will step in to protect depositors."
"..talk of black swans of an economic nature forcing the Fed to print trillions again. Commercial real estate may be the next domino to fall. Back in 2008, default rates rose to 9%, up from 1%, as interest rates rose.
Today, the damage to commercial real estate loans which total about $2.7 trillion could be far greater. Over 40% of the US work force now works remotely since May 2020. The decline in demand for commercial properties has worsened by recent tech layoffs. The value of office sector REITs have fallen by about 55% which translates into a 33% reduction in the value of office buildings.
The default rate of between 10-20% in commercial real estate which was the lower end seen during the worst of 2008 would result in about $80-160 billion in additional bank losses. This would be ruinous for hundreds of smaller and midsize regional banks that have already been weakened by higher interest rates. The 2008 financial crisis spread from the housing sector to the rest of the economy as large banks with exposure to housing took tremendous losses.
Today, the Fed has created a moral hazard in guaranteeing depositors. Bank executives may take bigger risks if they believe the Fed will step in to protect depositors."
Trade ativo
20% down so far... on way to targetTrade ativo
Interesting action
Didn't quite meet target
But checking on interest rate sensitive stocks.
We probably have a decision point coming soon in this sector.
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