Professor Glenn A. Okun
The Rabid Capitalist: The Big Point is a brief summary of a detailed note available to paid subscribers.
Office mortgages continue to deteriorate as an asset class as a result of a liquidity freeze. The Rabid Capitalist warned readers that a liquidity crisis was developing for office real estate in July (see https://therabidcapitalist.com/2023/07/25/bank-lending-diet-or-starvation/). The latest sign of distress has come from the commercial mortgage-backed securities (CMBS) where a mere thirty three percent of maturing office property loans were repaid during the first nine months of 2023 according to Moodys Analytics.
This is horrifying performance. It is the worst repayment rate in at least fifteen years. By comparison, in 2009, 47% of these mortgages were repaid. Prior to the pandemic, greater than eighty percent of these loans were consistently repaid.
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