•Wilbur Ross Sees `Huge' Commercial Property Crash Ahead for U.S. Assets

Discussion in 'Economics' started by ByLoSellHi, Oct 30, 2009.

  1. •Wilbur Ross Sees `Huge' Commercial Property Crash Ahead for U.S. Assets


    Wilbur Ross Sees ‘Huge’ Commercial Real Estate Crash (Update1)
    Share Business ExchangeTwitterFacebook| Email | Print | A A A

    By John Gittelsohn and Thomas R. Keene

    Oct. 30 (Bloomberg) --
    Billionaire investor Wilbur L. Ross Jr. said today that the U.S. is at the beginning of a “huge crash in commercial real estate.”

    “All of the components of real estate value are going in the wrong direction simultaneously,” said Ross, one of nine money managers participating in a government program to remove toxic assets from bank balance sheets. “Occupancy rates are going down. Rent rates are going down and the capitalization rate -- the return that investors are demanding to buy a property -- are going up.”

    U.S. commercial property sales are forecast to fall to the lowest in almost two decades as the industry endures its worst slump since the savings and loan crisis of the early 1990s, according to the property research firm Real Capital Analytics Inc. The Moody’s/REAL Commercial Property Price Indices already have fallen almost 41 percent since October 2007, Moody’s Investors Service said Oct. 19.

    Ross, chairman and chief executive officer of WL Ross & Co. LLC, said in an interview on Bloomberg Radio that he would use “extreme caution” before putting money into commercial real estate, especially office space, because properties are losing tenants.

    U.S. office vacancies hit a five-year high of almost 17 percent in the third quarter, while shopping center vacancies climbed to their highest since 1992, according to the property research firm Reis Inc.

    “I think it’s going to take quite a while to work itself out,” Ross said.

    Ross and PPIP

    As of Oct. 15, Ross said he had spent less than $100 million of at least $1.5 billion available to him under the Public-Private Investment Program, an investment pool of private and government money for purchasing distressed assets from financial institutions.

    Ross used the funds to purchase mortgage-backed securities tied to retail properties, he said in a Bloomberg Television interview.

    In 2007, Ross ventured into the declining residential real estate market, winning an auction for the home-loan servicing unit of Melville, New York-based American Home Mortgage Investment Corp. He agreed to pay between $435 million and $500 million for the right to collect payments and maintain escrow on about $45.3 billion of home mortgages.

    Dubbed the King of Bankruptcy by clients during his quarter century at the Rothschild investment bank, Ross, 71, entered the U.S. home mortgage business as an increasing number of borrowers quit making payments and profits sank in loan servicing.

    To contact the reporter on this story: John Gittelsohn in New York at johngitt@bloomberg.net.
    Last Updated: October 30, 2009 11:20 EDT
  2. S2007S


    Heard this on bloomberg this morning

    Are we still headed for that "V" shaped recovery.


  3. 1 to 2 years of unwinding the Commerical RE debt....good luck.

    Things are far to simular as what happen in 1929. We have had the "Crash" 6500 from 14000........

    Now we have the 50% rally.

    We also have the pundits claiming the Great Recession is over...with the fake GDP @ 3.5.

    Im in Oil, Im in Gold, and I have raw land with water now in Texas.

    Texas the only state in the United States to be weathering the storm. Boat loads of Companies relocating to the San Antonio/Austin area.

    The rest of the country is going to shit....and Texas has guns.

    So fuck Obama and the Crooks in the White House. My net worth is protected, my land is protected and down here, people are still making a boat load of money.

    Hopefully, Texas will break away from the rest of this fucked up country if Obama and congress continues down their path to Slavery.

    China is down here dumping 1.5 Billion with a Austin Firm for Wind Power. More and more money is pouring in Texas everyday.

    Im a NYCer, educated in Chicago, traded for Schonfeld Securites and Last Atlantas........Not a native Texan...but God Bless Texas..
  4. What never made sense is the insane buildout of stripmalls.

    They they expect the US population to double? I never understood why there was such a huge disproportionate buildout in the last 4 years.

    Anyone have a clue why such a buildout, there is not enough people in the US to support so many square feet of commercial buildout.
  5. We had the same explosion in stripmalls here in The Woodlands, TX USA (just N of Houston). I'd guess the ones built in '05-06 are maybe 40% leased. There is one larger '08 property that stands 0% leased!

    I heard a retail sales expert say we had 20 sq ft. of retail space for every man, woman, and child in the US. The problem is we really only need about 10. And this report was in Q2 of '08, while the last (and largest) batch of properties were being built.
  6. we have see throughs all over the place even in the midwest
  7. because we had a cash out-refi economy from 2003-2007

    why wouldnt you put up a 30 year life span infrastructure build out for a 4 year artificial fluke?
  8. <img src = "http://2.bp.blogspot.com/_gzuK9jsKG-g/R3pl2scnCwI/AAAAAAAADm0/DcF0YNfeb9s/s400/Mr.%2BEd.jpg">

    wilbur is the only man i talk to