Wednesday, March 10, 2010

NYC Commercial Real Estate: It's Getting Worse

Another big NYC real estate mogul is taking gas on one of his buildings.  Unfortunately, the beneficiaries (teachers) of his co-owner, the California State Teachers Retirement System, will most likely bear the economic brunt of this "imminent default," as I'm sure Larry Silverstein has taken more out in fees connected with the deal than he has left in as equity, or would be on the hook for when the deal takes a dirt nap.  Recall, Silverstein was the real estate guy who profited handsomely from the destruction of the World Trade Towers, as he benefitted nicely from the property and casualty insurance policy he had recently re-upped on the WTC complex.

Here's a link to the article:  Another one bites the dust  Here's a cool view of the building:  LINK

If I had to guess, knowing what I know about how big State pension funds are marking their private equity and real estate holdings, I would bet that CalSTers has this investment fully valued.  It seems it's always the little guy who gets screwed these days, as the teachers who rely on CalSTers for their retirment income will take a big hit on this one and many others like it.


  1. Dave,

    This excerpt is from Jim Willie's latest over at GoldSeek.

    " Last week, USFed Chairman Bernanke cast aside Mark-to-Market once again, so that heavy commercial loan losses could be ignored."

    The FASB should be renamed as "F*cked Accounting Sterilization Board".

    Joe M.

  2. Thanks Joe. I actually know for a bona fide FACT that banks are way overmarked on their CRE paper. A very good friend of mine (one of my best) is involved in real estate workout consulting. He told every deal he looks where the underlying property is worth at best 50 cents on the dollar, the big bank lender has teh loan marked at par. Every single one. We're talking BAC, WFC etc.