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Old 06-02-2020, 09:05 PM
small.business.guy.1 small.business.guy.1 is offline
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Default Financial Crunch Time Headed Our Way



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There's a new article on Wolf Street over CMBS (Commercial Mortgage-Backed Securities) real estate. It's based on a release of first numbers since COVID-19 & the lockdowns, and not looking good.

CMBS Delinquent Real Estate Numbers

Then there's this article:

Unprecedented Surge In New CMBS Delinquencies Heralds Commercial Real Estate Disaster

Now, it's early and of course, EVERYBODY'S 'Talking Their Book', and in this case, they all want Uncle to bail their rear tailbones out to the amount of likely trillions of dollars, but IMO, just don't see it happening.
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Old 06-02-2020, 09:22 PM
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Default Meanwhile back in Californ-i-a

Bill Allowing Commercial Tenants to Renegotiate, Break Lease Deals Advances in Calif.

https://commercialobserver.com/2020/...uQx2_0.twitter
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Old 06-02-2020, 10:58 PM
small.business.guy.1 small.business.guy.1 is offline
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Let's remember that these numbers were supposedly) thru May, 2020. So it's very unlikely that any of this rioting nonsense was part of the makeup of these numbers. So, betting is this is all COVID-19 related.

But for most of these chains/big box stores, the leases are bundled & turned into CMBS by the reality groups who own the properties. In many cases, the value of the CMBS paper is based upon the consistent flow of rent payments. Guess what is endangered?

For example, CBL Property Group looks to be the poster child:

Quote:
CBL, which has over 100 malls in 26 states, many of them serving less affluent areas, said in an SEC filing today that it has “elected to not make the $11.8 million interest payment” due on June 1 on its 5.25% unsecured notes. If CBL doesn’t make the payment within the 30-day grace period, it will be in default. CBL’s shares are down to about 26 cents.
That's 100 mall's. That's a huge amount of stores.

How many of those stores got impacted by the rioting? Want to bet CBL will be the only reality group that takes a hit in all this so-called 'protesting'?

Guess where a lot (more than a majority) of these properties are located? In 'blue' governance areas of the USA.

What's the plan a year from now for these businesses? This is some SERIOUS coin involved in rebuilding operations, and we are talking about survival of entire business chains.

And IF these businesses don't re-open, then you have a bunch of utterly clueless mayors and governors who are collectively dumber than a box of hot rocks in regards to what this means to the revenue picture.


My .02
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Old 06-03-2020, 06:43 AM
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I see real estate values dropping massively in certain areas.
Also, I see REIT's freezing until they can offload some assets.
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Old 06-03-2020, 07:26 AM
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I have a REIT and got a letter yesterday saying that no repurchase funds will be available for an undetermined length of time. Occupancy is down 20%. Paid well for many years but its not a good thing to have now.
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Old 06-03-2020, 09:10 AM
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In my town, the ex mayor was a realtor and actvely pushing huge development projects, apartment buildings , shopping centers, Restaraunt chains, etc. Despite having a huge growing traffic problem and already many vacant strip mall space. I was told that $700 million in development was pumped into this city with population of 40K. I sparred with the mayor over this when they were considering converting 61 rural acres into another shopping center to compete with the last one.

He left us with a huge tax revenue problem that this commercial development was to solve. No doubt REIT funds have funded this project.

Now with COVID many of those businesses are in trouble , especially the restaraunts. Our mall which has never done well, had excellent new management planning to convert some space to a retirement community, that idea may be tabled now.

We have had no unrest or looting. It Will be COVID19 that drove the final nail in this town.

We are going to end up with a lot of failed businesses and it will erode the community and tax payers will foot the bill.

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Old 06-03-2020, 09:24 AM
Henrykjr Henrykjr is online now
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In financially tough times there is always opportunity. Warehouse and dual use space int he 1500'-3000' range is hotter than ever for many reasons.

It allows both small and large business' to spread out to compete against the Amazons of the world.

HK
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Old 06-03-2020, 09:40 AM
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We participate in an LLC involving retail space in grocery store anchored shopping centers and a month ago we got a letter indicating that rent payments are down and distributions will be reduced by half.
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Old 06-03-2020, 10:33 AM
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I have noticed a lot of articles on financial websites lately, touting some REITs and their high distribution payouts.

Most were commercial, and a couple were mortgage related.

I did hear on Fox Business this A.M., that mortgage applications are up 18% lately.
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Old 06-03-2020, 03:49 PM
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I get a monthly distribution (actually, my mother gets it, and splits it between my sister and I) from a real estate holding. She let me know in April that because of COVID-19, they weren't getting the rents (they're in CA) and there would be NO distribution for a while. Fortunately, that money is "gravy" for us, and not something that we depend on. If it were, we'd definitely be hurting.

In the meantime, I'm paying off as many bills as I can, as fast as I can. The less debt I am carrying, the better.
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Old 06-05-2020, 01:59 AM
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Here's the dumbest Mayor in America finally figuring out that economics do matter.

Lightgroot begs business not to abandon Chicago

The dumb clown decides to allow looters to trash your stores, steal/trash your inventory and all your built-in furniture & displays, and basically put the store out of business for weeks, if not months. Insurance is very unlikely to cover this, and if it happens, it's only going to be partial coverage, and that after after a long court fight.

It's all about the money - and Mayor Lightgroot doesn't have a clue about the financials that affects these types of re-opening & re-building plans.

Hint: Somebody should explain to Lightgroot that in the current market, if you give most retailers a choice between investing even MORE $$$'s in repairing their damaged non productive (sunk costs) B&M (brick & mortar) presence, or investing capital (again, those same $$$'s) in your (likely) growing web based commerce presence, well, that's a no-brainer move.

As a retailer, you go for the path that generates the greatest return for invested capital - & that's not B&M.

Those rioters & looters just seriously injured, if not fatally injured Chicago's downtown CBD. In one week's time. Amazing.
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Old 06-05-2020, 08:58 PM
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Had a friend who always used the acronym "DGSOS" in describing these type of 'protests':

In his opinion, this would probably qualify as a "Don't Get Stuck on STUPID" (DGSOS) moment:

Quote:
At least 60 Chicago-area pharmacies have been damaged or closed this week — most on the city's South Side — following unrest in the wake of the death of George Floyd, and patients are struggling to get needed medications, The Chicago Tribune reported.

CVS Health said as of June 3, 30 of its Chicago stores were closed, mostly in the Loop and the South Side.

Walgreens didn't say how many of its stores closed, but community members told the Tribune that several Walgreens on the South Side have closed.

The closures are making it difficult for residents with diabetes, heart problems, mental health disorders and drug addiction to get their prescriptions, the Tribune reported.

"It’s a huge problem if you can’t get your medication filled. We have fewer and fewer access points for patients, so when these close down ... or they’re unable to serve the patients, it’s catastrophic," Kevin Colgan, vice president and chief pharmacy officer at the University of Chicago Medical Center, told the Tribune.

Mr. Colgan said the medical center has been trying to fill prescriptions for patients whose usual pharmacies are closed.
Hard to get prescriptions filled because pharmacies are closed

Brilliance at work. Attack & loot the pharmacies in your own neighborhoods. Undoubtedly the work of Chicago Public School honor roll students. Probably while on their way home after choir practice.

Have the City of Chicago issue them all a 'Participation' certificate.
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Old 06-05-2020, 09:40 PM
Rural Buckeye Guy Rural Buckeye Guy is offline
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Natural selection is not supposed to be pretty, merely effective. Its a taxbase haircut...Lightfoot is gathering in her social dividends.
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Old 07-05-2020, 10:01 PM
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Living in a Permanent Distortion – Nomi Prins

, “We are not going to pay back this debt, and this is global. Nobody is even considering trying to pay back the debt that has been created. Let’s think about why that debt has been created. It’s not just because the economy slowed down. That’s one reason and kind of an excuse. The reality is the Fed is on steroids, and other central banks are on steroids . . . throughout the world in a larger number and larger magnitude than in the wake of the financial crisis of 2008. This means all this new debt created is even cheaper than the debt created going into the 2008 crisis. So, more debt, created more cheaply, means less incentive to pay it back and more incentive to push it down the road and grow it.''

https://usawatchdog.com/




The big picture... CMBS are crashing.
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Old 07-05-2020, 10:59 PM
PeterWiggin PeterWiggin is offline
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Quote:
Originally Posted by small.business.guy.1 View Post
, they all want Uncle to bail their rear tailbones out to the amount of likely trillions of dollars, but IMO, just don't see it happening.
Fed res bank will buy up the mbs to "help" America but the real agenda is that the FRB wants to hold mbs of any kind because of there's a big enough crash then the Fed gets the actual mortgages and then gets the actual properties
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Old 07-05-2020, 11:06 PM
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Yea, blame it on the looters. Having the economy shut down for months because of an impotent response to a pandemic has nothing to do with it. Then having governors take a "it'll probably just go away" position that lead to massive spikes in infection rates, was nothing compared to the looters. Trump's got the right idea, stop testing and then people will believe that things are safe and the stores will fill up again. If only President Ostrich could destroy all means of information but Fox News. If a tree falls in the forest does it make any noise. Trump says no.
Don't worry, Mitch won't have any problem bailing out the banks like in '08. It's only money. Looks like the conservative, budget conscious party is about to start throwing more stimulus checks at dead people to assure Trumper gets his second term.
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Old 07-05-2020, 11:16 PM
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These new guys always chiming in without any study or a basic understanding of economics...



Trump Trump Trump Gezzzz
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Old 07-17-2020, 09:51 PM
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Quote:
Originally Posted by IceFire View Post
I get a monthly distribution (actually, my mother gets it, and splits it between my sister and I) from a real estate holding. She let me know in April that because of COVID-19, they weren't getting the rents (they're in CA) and there would be NO distribution for a while. Fortunately, that money is "gravy" for us, and not something that we depend on. If it were, we'd definitely be hurting.

In the meantime, I'm paying off as many bills as I can, as fast as I can. The less debt I am carrying, the better.

Update: the Hospitals are paying their rent again (yes, that real estate holding is for HOSPITALS that don't own their own facilities, but rent them) so getting the monthly distribution again. Also, our renters have moved out of the house in town, and it is going on the market Monday. If we get the full asking price (the realtor set the price, and is pretty sure we can get it - it is considerably more than I thought it would be listed at - we will be able to pay of ALL of our bills except the mortgage on this place, and the money that would have gone to paying the other bills can let us have this place paid off in a year. Heck, husband could even retire EARLY if he wanted to!
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