Bank Failures

Boston Condos for Sale and Apartments for Rent

Bank Failures

If you were looking for positive signs about commercial real estate, you should run far away from this Boston real estate blog post.

Possibly over 500 Banks will collapse, others will be acquired, and the vast majority don’t have a clue how bad its going to be.

I don’t think most of the banks understand what is on their balance sheets. They are basically being told what to do by federal regulators and that’s equally as terrifying.

Seth Weissman of Urban Standard Capital and Steven Stuart of Fortress Investment Group, also expressed a bleak outlook for banks because of higher interest rates. 

Even for the optimist, the debt markets are challenging to navigate. It’s tough for lenders to value properties, while owners are reluctant to chip in more money needed to recapitalize their deals.

“We are looking for some substantive equity commitment if they are looking for any kind of relief,” said Weissman. 

Office sector is bad. Office is really really bad.  We are just pretending like it’s not happening. It’s happening.

Weissman, for his part, said they recently provided a loan for a distressed buyer of an office building in Little Rock, Arkansas, at around $25-30 per foot. He said there are not a lot of lenders interested in the office, leading to costlier rates. 

But for the poor office owners expecting the Federal Reserve to significantly lower rates anytime soon, restoring relief to property owners and salvaging deals. they should keep dreaming.

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Bank Failures

The pain of small and mid-sized banks isn’t over yet, according to Federal Reserve chair Jerome Powell.

Falling office values will harm more regional banks as a result of their ties to commercial real estate, Powell warned at a hearing on Thursday before the Senate Banking Committee reported by The Hill.  

Office struggles affect downtown neighborhoods in cities, Powell noted, in turn affecting banks with loans out to retail assets in central business districts.

“This is a problem we’ll be working on for years more, I’m sure,” Powell said. “There will be bank failures.”

After First Republic Bank bit the dust last week, the Federal Reserve signaled a pause in rate increases could be on the table at the next meeting in June.

Tighter lending practices are to thank for that potential rate hike reprieve. On the heels of this year’s third bank collapse, regional lenders fearing liquidity issues will rein in debt offerings. 

“The question becomes: Will the tightening of credit conditions to retain or improve liquidity by those banks be enough to significantly slow economic activity?” said Fannie Mae Chief Economist Douglas Duncan.

Boston Real Estate Blog Updated 2024

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Bank Failures

In early March, Brown Harris Stevens broker Mindy Diane Feldman had reservations about a First Republic Bank loan.

A buyer had offered to purchase a New York City co-op and had pre-approval from First Republic for a below-market-rate mortgage — the bank’s specialty. The broker wanted to ensure that if the Federal Reserve hiked interest rates, it wouldn’t affect the closing or the buyer’s ability to meet the co-op board’s financial requirements.

Two days after the broker asked for details about the mortgage, Silicon Valley Bank collapsed. Fearing that First Republic could get caught in the maelstrom, The real estate broker urged her client to take another bidder’s all-cash offer.

Filed Under; Smart Move

Source: The Real Deal

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Bank Failures

The FDIC closed seven more banks on Friday, and that brings the total FDIC bank failures to 106 in 2009.

Looking to buy a condo, you should buy now. If you wait too long, there might not be any banks left to give you a mortgage.

File Under: Cash is King.