Commercial Real Estate Consultant, frustrated artist and #triathlete #realestate #industrial #office #chs #sc #charleston #ClemsonAlum #BJJ #BassGuitar #MOB
Charleston SC
Joined October 2010
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Don’t any of you freaking blowhards on this platform have anything else to speak about other than politics? No one gives a shit about your red team or blue team agenda. They are all lying corrupt assholes get a new hobby! #growup #2024
what do you guys think?
X's Right-Wing Echo Chamber Feedback Loop:
1) Platform Demographics: X has 3-4 times as many Republicans posting as Democrats, according to a recent poll by Elon Musk.
2) Content Imbalance: Left-leaning users are often subject to personal attacks within their posts and are exposed to a higher volume of right-leaning content, often hostile in nature.
3) Left-Wing Exodus: As a result, many left-leaning users leave the platform and avoid paying for amplification (Blue Check verification).
4) Engagement Disparity: Left-leaning content performs 3.5X worse than right-leaning content, leading to a higher volume of right-leaning posts as users see what "works" on the platform.
5) Monetization Bias: Right-leaning content generates more revenue because it receives more engagement, especially from "blue check" users. The monetization system favors ad views from verified accounts, further amplifying right-leaning voices.
6) Reinforced Imbalance: With more left-leaning users fleeing and right-leaning users posting and engaging more, the platform skews further toward the right.
7) Feedback Loop: Return to Step 1, with the Republican-to-Democrat ratio increasing each cycle, intensifying the echo chamber effect.
Michael Ferrer retweeted
On commercial real estate, delinquency rates are rising:
teapawt.net/ReefInsights/status/17…
Rising Commercial Real Estate Delinquency Rates
Delinquency rates for commercial real estate have risen during each of the past three recessionary periods.
This chart shows the year-over-year change in delinquency rates.
In Q3 2001, delinquency rates increased to 1.93%.
In Q1 2010, delinquency rates increased to 8.92%.
In Q4 2020, delinquency rates increased to 1.13%.
As of Q3 2023, delinquency rates, which stand at 1.07%, are on the rise.
Case Study
Rising commercial delinquency rates pose an issue for the lending institutions that have provided loans. Today, the issues are three-fold:
1. Exposure
2. Refinancing
3. Interest rates
Commercial property values have declined over the past twelve months. Notably, office real estate has seen the largest declines in valuation. This means that a lending institution may be exposed.
Exposure Example
In 2019, Lending Inc. provided an 5-year interest-only $11 million loan for an office property that was valued at $15 million.
Today, the property is worth $9 million, and the loan is due. The owner of the property cannot sell the property to pay off the loan, because the proceeds would not cover the amount owed.
If the owner of the property defaults on their loan, Lending Inc. would not be able to recuperate the $11 million that they lent to the borrower.
Refinancing Example
You may think that the borrower could refinance to avoid this issue, but this poses a new challenge. The property is no longer worth $15 million, so a lending institution would not be willing to lend $11 million.
Lending Inc. says that they are willing to lend $7 million on the property, but this would mean that the borrower needs to pay $4 million to close the previous loan position.
Some borrowers may choose to default on the loan rather than pay $4 million to cover their position.
Interest Rate Example
Even if the borrower wanted to front the $4 million, interest rates are now higher than they were in 2019.
It's possible that the deal is no longer profitable, given the higher interest rates. This adds pressure to the borrower, and it may make them more likely to choose the option of defaulting on the loan.
Blackstone's CEO, Steve Schwarzman, stated at Davos that they plan to expand their investments in commercial real estate.
Currently, the value of the firm's global real estate portfolio stands at $579 billion.
Conclusion
Commercial real estate delinquency rates are rising. This poses an issue for borrowers and lending institutions. Interest rates have increased and commercial real estate values have declined, which makes defaulting on a loan more enticing to borrowers whose loans are coming due.
I used to love @amazon Alexa now it sucks. The bait and switch upselling is obnoxious. I threw my device out today. Who wants an AI assistant who doesn’t do what you ask?! #Siri is way better. @JeffBezos . Please @elonmusk make a better device and take all their market share
Michael Ferrer retweeted
The new normal for Commercial Real Estate (CRE):
Properties are selling for less than half of what they were worth just 5 years ago.
A downtown Los Angeles office building that sold for $92.5 million in 2018 just sold for $44.7 million.
2 days ago, the Aon Center, Los Angeles' third largest building, sold for 45% less than its last purchase price in 2014.
All as real estate giants like WeWork file bankruptcy and flood the market with supply.
The strength of housing continues to mask the weakness of CRE.
This is beyond bear market territory.
Michael Ferrer retweeted
JUST IN: Chinese property stocks are now down ~65% from their highs and back to 2008 levels.
Over the last year, sales of Chinese property stocks are down almost 25%.
To put this in perspective, this is worse than 2008 when sales fell by ~20%.
China also cut interest rates on $5.6 trillion of mortgages with their HY real estate index down 80%+.
China's real estate market is beyond recession territory.
Michael Ferrer retweeted
Africa has the fastest-growing, youngest population of any continent. By 2050, one in four people on the planet will be African — a development that will transform many African countries, experts say, and reshape their relationship with the world. nyti.ms/3MoDAGS
Michael Ferrer retweeted
BREAKING: New home prices just crashed by the largest amount on record, down 18% over the last year.
According to Reventure, this is the biggest annual decline back to 1965.
Even in the worst month of the 2008 financial crisis, the biggest decline was 15%.
The worst part?
New home prices are still up ~24% from their pre-pandemic levels.
As mortgage demand hits its lowest since 1994 and affordability is at all time lows, builders are in trouble.
The average selling price for a new home is down almost $90,000 since last year.
How can this end well?
Michael Ferrer retweeted
JUST IN: Bankruptcy documents show that WeWork, $WE, will immediately break 40 office leases in New York City.
Documents also show that WeWork plans to break leases on 70 properties in New York City.
The worst part?
40 of these locations are completely empty.
This comes less than 24 hours after the company filed bankruptcy.
Once a $47 billion company, WeWork still has 700 locations world wide.
The commercial real estate crisis is worsening.
Michael Ferrer retweeted
Over 70% of commercial real estate loans are from small banks.
These are the same banks that nearly collapsed in the regional bank crisis.
All as $1.5 trillion of CRE loans are set to be refinanced by 2025.
Follow us @KobeissiLetter for real time analysis as this develops.
Michael Ferrer retweeted
Here's a fun fact:
The CEO of Lucid Motors earned $379 million in 2022.
That is more than the combined pay of the CEOs of Apple, Microsoft, and Google.
And the kicker? -- Lucid only made $608 million in revenue in 2022!
Michael Ferrer retweeted
David Bakhtiari sounds off on the NFL’s turf issue following Aaron Rodgers ankle injury at MetLife stadium.
Michael Ferrer retweeted
You certainly hope it's not severe, but this is certainly reminiscent of the 1999 opener, when Vinny Testaverde ruptured an Achilles' in the second quarter. #Jets