The 7% Solu....errr....Problem?

That was my immediate reaction when I came across this piece over the weekend. Previously I was pooh-poohing talk of 2 and even 3% delinquencies on the grounds that they were still crazy low. But once you get over 5% then you start a-thinking a little more.

The numbers by sector were about what I expected with one exception:
The multifamily sector accounted for 26% of the $37.9 billion delinquent unpaid balance for CMBS in November, followed closely by retail (25%), office (16%), and hotel (15%). Conversely, the industrial market accounted for less than 2% of the delinquent unpaid balance for CMBS during the same period. Health care properties represented less than 1%.
Hotel at 15%? Does that include the ESA loan? If not, I agree with the story that you are going to see more trouble there before it is all said and done. But are we going to hit 7 or even 8% in 2010? The hotel sector alone might be able to push that number, but we'll all just have to see. (Boy, do I wish I owned a working crystal ball sometimes.)

From the legal perspective: this means more and more working out. And I don't mean the treadmill, although I am going to take a spin in that as soon as I finish this post. We lawyers will have to spend some long hours negotiating and documenting deals. And that has to be done carefully -- no more of this "cowboy law" stuff we saw going on. I am starting to see litigation ramping up over some deals where you have to wonder, if you know what I mean. This is a time to dot i's and cross t's like you never have before.

Comments

Post a Comment

Popular posts from this blog

Oops. I plain forgot.

I said some time ago that I would publish a review of the new Powerhouse Restaurant and Bar , located right beneath my Chicago office. And I never did. So here goes. I've had a couple of lunches and dinner since the place opened, so I can be candid. All the food I had ranged from very good to superb. The pork belly and chicken thigh appetizers were wonderful. The pork chops were juicy and tasty. The ribeye steak was perhaps the best I've ever had (and trust me, I have eaten a LOT of steak in my life). Forget the red meant and cholesterol and fat and all that stuff for one meal; just splurge and eat it. One of my dining companions said the cod was good but not superlative in his view. I was really too full to enjoy the sweet potato doughnuts. On the lunch side: I recommend the cheese quesadillas and the burger, which also has the tastiest bacon from Wisconsin. I'm getting hungry and I don't want to tempt myself...2008, after all! Service is always first rate, f
Read more

The DLB's Third Anniversary Post

Wow -- three years of blogging this Sunday.  Since I do not plan to write this weekend, I want to take a moment now to reflect on what the past three years have meant to me. First and foremost, blogging has been fun and educational. I truly believe that, thanks to reading more, writing more, and interacting with pros in the business I have become a better adviser to my clients. Yes, the technical lawyering and drafting and stuff is very important. But I have learned much by trying to put on the glasses of your client and thinking practically, while also keeping that lawyer hat on.  That said, I know I am not the business guy, but I also think I can give better advice while at least keeping in mind that side of the coin. You just do the best you can. I have also changed as a blogger, and hopefully for the better.  I get more news and posting from Twitter now than I do from the news or from other blogs. I do not know whether that is good or bad, but I know it is the reality of the situat
Read more