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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (32904)	11/30/2008 6:15:06 PM
From: Spekulatius	Respond to of 78753

Paul I think it's positive for the buyer now but not that positive for the folks or entities who are holding the paper (insurance companies, banks etc. ) or who are holding straight CMRE loans (which are not traded) yielding 7% or so. Commercial RE is a bread& butter business for many smaller banks. If it happens to be that Commercial RE is indeed so risky that it deserves mid teens interest rates many banks are going to be toast. RE developers and REIT's are going to be toast as well of course because refinancing means death. I think the current yield exaggerate the problem and would be happy to take that part of a trade, but i think it is unlikely that the market right now is completely wrong and we go back to 7% cost of capital any time soon either.