According to this article, a “fire-sale” in euro is happening for the commercial real estate market.   As could be guessed, the countries that are shedding this paper are banks in Ireland and Spain, along with countries that helped finance or have exposure to these markets like Britain and Germany.  It is stated that some of these properties are going for as low as 20% of face value.   That says volumes, either these investors are feeling impaired with these assets or they are wildly over-valued.

De-leveraging is mentioned as a motivation as well, this could point to some distressed institutions that need to raise capital fast.  If the Greek bailout falls apart, we will see more turmoil in the global markets and that will accelerate the amount of assets that will be shed into the market, putting more pressure on prices.  For people with capital on the side-lines, opportunities will be arriving in mass most likely sooner than later.   Keep you posted.

BusinessWeek (Simon Packard)  Banks will sell about 15 billion euros ($20 billion) of loans secured by commercial property in Europe through 2012 as they anticipate tougher capital regulations, debt adviser Situs Cos. said.

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Bank of America is shedding assets to strengthen its balance-sheet and increase their cash position.  With the ongoing turmoil associated with lawsuits against the national bank, they are preparing for any large judgements or losses tied to alleged fraud on mortgage documents and improper procedures.   This is so large scale and pervasive, BofA will most likely take more losses in the future.  With this reduction, BofA can focus on its core businesses which are quite profitable when manged correctly.

It is in our best interest to have more, smaller banks instead of huge global financial complexes.   It doesn’t make me feel better that the place I deposit my savings, is doing high-frequency trading, off-balance sheet etc… and dark pools?!?  We need to get back to fundamentals so we can “get on with it”.   Banks are banks and Investment Banks are investment banks.

Wall Street Journal: Bank of America Corp. has reached an agreement to sell an approximately $880 million portfolio of commercial mortgages at a discount of 20% to 25% off the face value, according to a person familiar with the deal.

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Banks’ $300 Billion ‘Pretend’ Problem

June 13, 2011

Some of the largest U.S. banks may face similar questions that are now being posed to Regions Financial as regulators crack down on so-called extend and pretend loan practices. But the practice is only a symptom of a much larger problem that eventually will force banks to digest billions in losses on commercial real estate [...]

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How to approach commercial real estate loan workout strategically

June 13, 2011

New accounting standards issued by the Financial Accounting Standards Board will change the way lenders report their troubled debt starting June 15. This significant development creates more uncertainty and concern for commercial property owners obligated on distressed loans. What impact will these new standards have on your commercial loan workout negotiation? What can you do [...]

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WSJ – Delinquency rates hit record 9.42% for mortgage-backed commercial loans

April 6, 2011

Editor’s Note: Many of the commercial loan deals that were made during the housing bubble only made sense when valuations were at those frenzied levels.  Now that we are having a meaningful correction in the real estate market, these loans will need to either be restructured or defaults.  It is my belief that once oil [...]

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SBA expands commercial refinancing program in Georgia

March 31, 2011

Editor’s Note: It has been clear to me that some program would need to form to help refinance commercial loans that were made during the go-go days and now do not pencil for current lending requirements.  The Small Business Administration in Savannah, Georgia.  We are going to see more of these programs pop-up once enough [...]

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Nevada lawmakers consider commercial loans bill to help borrowers stop repayment pressure

March 31, 2011

Business Week is reporting that the Nevada Senate is look at a new bill that would limit a clause that commercial loan borrowers are getting from banks in that state.  During the boom time, the commercial developers signed these loan agreements with this type of language.   It has to due with the decline in the [...]

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Hard money lender among businesses seeking bankruptcy in Nevada

March 30, 2011

Editor’s Note:  Here is an interesting peek into a usually more private and out of the lime light world of hard money lending.  The Vegas Sun reported that in local business bankruptcy filings, a prominent large private money (or “hard money”) firm filed for bankruptcy protection in Nevada Court.  In this disclosure they had to [...]

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