Debt Bomb Coming Soon

[shooter]

Commercial property is going to be a very big issue in the coming months.
270 billion dollars of loans will expire. or mature in
the next few months.
How will this affect your insurance carriers?

With more employees working from home, or mobile,
office buildings are having lower occupancy rates.
The owners of the property are receiving less income
from the properties.
Demand is less, so they can't raise rates to make up for
lower occupancy.

This means less income for the owners of these properties.
at a time when they will have to refinance their loans.
Plus, higher rates in the market.

Most large properties are set up with a balloon payment.
With the interest rates at the current level, this makes
a refi tough.
Pimco, and Brookfield Assets have loans in default currently.

If there is a Debt Bomb in commercial real estate how will
it effect insurance companies that are holding some of these loans, are
properties in their portfolio's?

Shooter







.

 

[NewbieNewbie]

Damn good question
I have wondered about this for a couple of years. At least half the people I know in the corporate world are now wfh. Most love it, and will not go back. I can't blame them either. So it just seems like a commer8cal real estate bubble is going to burst at some point.

 

[Markthebroker]

 

[somarco]

No worries. Yellen and Joey will print more money and tell you everything is going as planned.

 

[PrivClientSG]

Interesting topic, and thanks for the insight. Historically, whenever you look at any real estate crash, bubble bursting, crisis, or whatever you want to call it -- look at the impact on the "banks" vs. the "insurance companies." Yes, I've heard every reason why this time is and will be different, and I am not saying it won't be. However, I've always felt that -- insurance companies financials have always been better than banks, insurance companies are better insulated from negative occurrences than banks, and insurance companies are more resilient than banks...and so goes the impact.

In today's landscape, while I don't own any real estate with an insurance company as the lender, I don't think owners are going to "walk away" from major holdings. I am more worried about the lease-side than the owner-side. The transition, and new/mix use phase has already begun in major metropolitan cities across the US (and to a lesser extent the world) and unlike major crashes/crisis in the past, each and every asset class may not experience a major impact here. No, it won't be like during the pandemic, but we did see absolute craziness in the residential marketplace.

Regardless, I don't know that the road will be washed away as much as it might get bumpy, LOL.

 

[toolbelt]

Malls will be bulldozed and replaced with condo towers.

 

[marindependent]

Sounds like a marketing opportunity - Who has a great Vacant Office policy?

 

[Al3x Lee]

Sounds like a marketing opportunity - Who has a great Vacant Office policy?

Vacant building policyholders be like:

 

[AZDave]

Its a good thing insurance companies don't hold large investments in real estate, bonds, bank stocks...

 

[Life Hawk]

One solution might be to make affordable housing for all those who streamed across our boarders the last few years.

Tongue in cheek.