Tuesday, October 06, 2009

Soured Loans To Other Banks

Just one more example how banks have marked numerous assets on their balance sheets..... ;-)

Ein weiterer Beleg wie marktgerecht die einzelnen Positionen der Bankenbilanzen bewertet sind..... ;-)


WSJ
After slogging through quarters of losses from disastrous bets on the Arizona and Florida housing markets, Milwaukee-based Marshall & IlsleyCorp. is facing a new source of pain: bad loans to other banks.

The bank said Tuesday it expects to post a larger third-quarter loss than analysts had expected, in part because it will set aside $185 million for loans to other banks that have abruptly gone bad.

In fact, the bank said 75% of the now-troubled loans to other lenders were current just seven days ago on Sept. 30.

Here comes another example.......... This time it´s CRE......

Hier ein weiterer Beleg für die "überragende" Bilanzqualität wenn es um die Risikovorsorge bei gewerblichen Immobilien geht.....

Fed Frets About Commercial Real Estate WSJ

In another sign that many U.S. financial institutions are inadequately protected against potential losses on commercial real-estate loans, banks with heavy exposure to such loans set aside just 38 cents in reserves during the second quarter for every $1 in bad loans, according to an analysis of regulatory filings by The Wall Street Journal. That is a sharp decline from $1.58 in reserves for every $1 in bad loans from the beginning of 2007.

[federal reserve and commercial real estate]


Make sure you visit the comment section for another stunning CRE story leading to the highest per-square-foot price paid for a Birmingham office property since 2001, easily topping the 2008 mark........

Empfehle zudem einen Besuch in den Comments für ein weiteres Bespiel aus der "Wunderwelt" der gewerblichen Immobilien die erzählt mit welcher Finanzierung es auch jetzt noch möglich die Quadratmeterpreise aus dem Jahr 2008 locker zu toppen .....

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4 Comments:

Blogger jmf said...

Amazing......


New Order: No Money, No Problem
WSJ


A Birmingham, Ala., office building has sold for about $147 million, in what is being billed as the largest office-building deal in the Southeast this year. But what is particularly notable about the transaction is how little cash the buyer had to put into it: $1.3 million.

To acquire the building, the Rainier group assumed a $140.7 million mortgage on the property held by Transamerica Life Insurance Co., a unit of Aegon Group of the Netherlands, according to Doug Blough, chief financial officer of Net Lease Capital Advisors. It also paid the lender about $1.3 million in cash and issued Aegon a $5 million mezzanine note. Aegon declined to comment on the transaction.

But the buyers also took other steps to sweeten the deal for Aegon. For example, they bought an insurance policy from HCC Insurance Holdings Inc. that guarantees a $47 million balloon payment on the Aegon mortgage will be paid when it comes due in about 19 years. They paid for that policy with an additional $10 million mezzanine note on the property. "This is what you need to do because there's no cash available," Mr. Blough says. HCC couldn't be reached for comment.

The transaction represents the highest total price paid for an office building in the southeastern U.S. so far this year, according to Real Capital Analytics, a New York real-estate research firm. At $250 a square foot, it is also the highest per-square-foot price paid for a Birmingham office property since 2001, topping the previous mark of $217 set in March 2008, says Real Capital

10:26 PM  
Blogger jmf said...

WSJ via Rolfe Winkler


.....banks have a few tricks up their sleeves to prop up their [commercial] real-estate assets: First, they are extending troubled loans instead of making struggling developers pay them off now. Second, the banks are essentially paying themselves interest from so-called interest reserves that were built into the loans, allowing the borrowers to keep putting off payments. Lately, the banks may also be able to forestall write-downs because few people are buying office buildings and shopping malls at the moment, so it is difficult to put a value on real-estate assets.”

11:38 AM  
Blogger Knute Rife said...

Not to mention that the institutional investors know that the S&P run-up this year is half as big when measured in euros instead of dollars, i.e. half the "gain" is due to the dollar weakening, not to actual market strength.

9:19 PM  
Blogger jmf said...

Moin Knute,

indeed.....

The next bubble is already in the making.....

2:23 AM  

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