Sunday, December 6, 2009

Comings and Goings

The current CRE crisis will be over in 2011.

This guy says you should buy REIT equity now! I couldn't disagree more.

Banks fully understand their CRE risk, and it's manageable. Nothing to worry about there. Defaults are not expected to exceed 11.3%. Interestingly, in another article out by the same rating agency (Fitch) on the same day, is also quotes max losses for recent vintage CMBS at 8.7% and max CRE related losses at Insurers (presumably including their CMBS) at 8.37%.

GGP may come out of this whole thing mostly intact, despite angling by a number of players including Ackman, Brookfield, Simon, and Westfield.

Istithmar owns a number of trophy properties in the U.S. and is a subsidiary of Dubai World's. We saw a couple of sell-side reports listing CMBS exposures, but they were not consistent with each other and both were missing one property that we know of - as time allows, we'll publish a combined list. Most of the properties are in NYC, most are recent vintage, highly levered, and underwritten poorly. Some will default imminently.

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