'Tremendous' Distress in Commercial Real Estate: CEO - CNBC"It's happening down the road," Scott Rechler, CEO of RXR Realty told CNBC today.
When you look at the commercial real estate market right now, "there is a tremendous amount of distress that is not really visible yet," Rechler said.
Today "the blood is really in the boardroom behind closed doors where people are negotiating to solve problems," he said.
REALTOR® Magazine-Daily News-More Home Owners Walk AwayFor instance, on Thursday, financial services firm Morgan Stanley announced that it is turning five San Francisco office buildings back over to its lender two years after it purchased them when the market was at its priciest. The buildings are estimated to be worth about half of what Morgan Stanley paid.
“This isn’t a default or foreclosure situation,” spokeswoman Alyson Barnes told Bloomberg News. “We are going to give them the properties to get out of the loan obligation.”
Morgan Stanley is apparently current on the loan, so this is what is known as a “strategic default.”
Some might ask: If strategic defaults are OK for banks, why aren’t they OK for ordinary homeowners?
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Is this a commercial walkaway? or a negotiated loan workout?
Commercial short sale? may have worked.
Commercial short sales and commercial loan workouts
