Huge commercial real estate lender may file bankruptcy, heightens meltdown fears
Filed under: Company News, Earnings, Goldman Sachs , Bank of America
Analysts have been warning for months that commercial real estate would be the next financial tsunami. Vacancy rates have hurt landlord receipts. Tenants are able to force lower rents in negotiations due to the rising vacancies. Some tenants are filing bankruptcy or walking away from leases completely.
Commercial real estate losses have already started to show up in the financial statements of the largest banks. Some of the 106 banks closed this year under the supervision of the FDIC had tremendous losses on their commercial real estate portfolios.
In the midst of rapidly falling commercial real estate values, one of the country's largest real estate lenders, Capmark, will probably file for bankruptcy in the next few days according to The Wall Street Journal. The paper writes: "In 2006, a group led by KKR & Co., Goldman Sachs Capital Partners and Five Mile Capital Partners acquired the lender GMAC LLC's commercial-real estate business and renamed it Capmark."
The news of Capmark's demise could heighten fears that commercial real estate losses among banks will cause another significant wave of writedowns at major financial firms that have already had to take one round of government aid. GE (GE) and Bank of America (BAC) posted large commercial real estate losses in their third-quarter earnings.
Mounting commercial real estate losses also mean that the FDIC's ability to cover deposits at failing banks will be stretched more than it already is. The agency recently suggested that it may bring in $45 billion by implementing an advance collection of fees that banks would pay to the FDIC between now and 2012.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
10-25-2009 @ 12:24PM
Brian said...
Hang on to your hats, folks. This could be wave 2 of the financial crisis, and this time the government is already at the limit of its ability to prop up the banks. In fact, if they don't start pulling back their stimulus efforts our dollars may soon be worth no more than the paper they're printed on.
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10-25-2009 @ 2:45PM
P. Block said...
The wonderful government with their caring, loving attitude for the poor, the downtrodden have created this mess. Now we have a President whose work resume is a blank piece of paper running the businesses his leftist party destroyed. The final result will be a wonderful socialist society where we all equal--poor and downtrodden. Oh! By the way. The paper the dollar is printed on HAS NO value. You can't write on it--no space--it's against the law, no good for making your own cigarets--too stiff, no good for paper towels, napkins, and makes lousy toilet paper.
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10-25-2009 @ 2:51PM
larry said...
JUST 4 MORE DAYS: WHAT HAPPENS IN 4 DAYS? THE 80th ANNIVERSARY OF THE BEGINNING OF THE GREAT DEPRESSION ON TUESDAY OCTOBER 29 1929.NOW FOR A LITTLE TRIP DOWN MEMORY LANE, GET OUT THE HISTORY BOOKS, DUST THEM OFF AND YOU WILL SEE THAT CONDITIONS THEN AND NOW ARE SIMILAR.WILL WE HAVE ANOTHER GREAT DEPRESSION? HOPEFULLY ,YES , "THEN WE CAN GET OUR COUNTRY STREIGHTENED OUT".
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10-25-2009 @ 4:16PM
RAY SIAZ said...
with all this mess uncle sam let happen the feds,state o cal ,county o montery, city o salinas want to tax the living blood out from us . L.A. is doing something to boost their economey by getting money from H.U.D. to lend it out to small business in hes city and make a strong economey that is thinking with brain not tushhh
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10-25-2009 @ 5:02PM
andy said...
this bank bailout thing is turning into a nightmare, trillions of dollars and not even one percent has gone to where it was suppose to have gone and may never will.
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10-25-2009 @ 6:13PM
Joe said...
Lets hope that those who voted for socialism get what they deserve.
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10-25-2009 @ 6:58PM
SEEBU said...
RECYCLE ALL THE POLITICIANS
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10-25-2009 @ 7:55PM
thinkermom said...
Joe said...
Lets hope that those who voted for socialism get what they deserve.
Socialism, take from the middle class and give to the wealthy. And don't forget this happened under the Bush Administration.
Another thought.....why doesn't the government lend directly to small businesses that qualify? Why is it necessary that there is a middleman (private banks, profits) involved? We need to do something creative to get this economy going and perhaps give those private banks some competition.
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10-26-2009 @ 1:22AM
Samir Semaan said...
How we get to this mess is by letting those people on Wallstreet move around like Tycoons and they bring all these problems on the taxpayers so I said to this administration no more lending just help the little guy after all they are the ones who will move this economy forward. What I mean is to help the small business owners mortguage lending and farmers manufacturers and college student by helping the little guy we improve the economy or the next wave of tsunamy meltdown there is no solution for banks and Wallstreet investment not to fail. this is the only way to bring confidence to the taxpayers and consumers in America.
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