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Many Happy Returns
Schrödinger's Flat: How Big a Problem is Commercial Real Estate?
Feb 14, 2024
This podcast explores the problems faced by banks due to losses on property loans, the potential impact of rising interest rates on commercial real estate, and the consequences for bank solvency. It also discusses the distress in the commercial real estate market, negative equity in house investments, and the risks of leveraged losses in property and commercial real estate.
34:28
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Quick takeaways
- Mounting losses on property loans have caused banks to set aside extra cash and slash dividends, raising concerns about the scale of the commercial real estate problem.
- Negative equity in the commercial real estate sector, particularly in office loans, is posing risks of defaults and delinquencies, impacting small regional banks and causing potential ripple effects in real estate investment trusts and property funds.
Deep dives
US and European Banks Facing Share Price Tumbles Due to Commercial Real Estate Problems
In recent weeks, American and European banks have experienced significant declines in their share prices. This is primarily due to mounting losses on property loans, leading to the need for increased cash reserves and dividend cuts. The concern is whether the commercial real estate problem is contained or if it is just the beginning of a larger issue.
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Discover
highlights
Listen to the best highlights from the podcasts you love and dive into the full episode