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After 2008, banks used their windfall to become the new McDonalds - an expansionist real estate company. Easier than giving out business loans. All those new b
by hindsightbias 9y ago
After 2008, banks used their windfall to become the new McDonalds - an expansionist real estate company.
Easier than giving out business loans. All those new branches will disappear in a few years as real estate profits peak.
- Analemma_ 9y agoThat explanation doesn’t make any sense. Why wouldn’t they just own the property and lease it, like any other landlord?
- toomuchtodo 9y agoLaws governing investment of capital. One course is speculative, the other is “operations”.
- foota 9y agoWell if you think the market will get hotter then you would want to wait to lease it.
- ABCLAW 9y agoThe other posters aren't correct. The actual reasoning is that the banks, as tenants, impart a top-flight credit score to a substantial portion of the building's finances if the leases are designed the right way. In return for the slightly more demanding leases which allow the credit-score to functionally pass through, they receive a substantial rebate on the market rate of their leased locations over long periods, affording them cheap arbitrage opportunities - if real estate prices and rents soar, they're still locked in below market rate at the pre-boom rates. If they don't, and rates go down, they have a substantial buffer before the market value of their leasehold is negative.