by Dave Kranzler
Investment Research Dynamics
The graphic above was sourced from @BankerWeimar. Powell once again earlier this month said that “bad commercial real estate loans will likely cause some bank failures but don’t pose a risk to the overall system.” Either he’s blind to reality or lying. Probably the latter. All we need now is for Powell to assure us that CRE loan defaults are “contained” a couple more times to confirm that a collapse is around the corner.
The CEO of a big investment fund (Fortress Investment Group) that has been buying CRE loans at prices ranging from 50 cents to 69 cents on the dollar said that about half of the maturing loans in CMBS securities (commercial mortgage back bond trust) are troubled. But it is going to get much worse. The CEO of Cantor Fitzgerald warned recently that there could be as much ast $1 trillion in commercial real estate defaults coming over the next two years. Moody’s estimates that 80% of CMBS office loans are at risk of default or restructuring this year.