4 ms·
It's about the book value, with both micro and macro incentives. E.g. A 20pct rent cut might mean a 100million property portfolio has to be marked down to 80 m
by thereisnospork 3y ago
It's about the book value, with both micro and macro incentives.
E.g.
A 20pct rent cut might mean a 100million property portfolio has to be marked down to 80 million dollars for a 20 million dollar loss. That means:
a: lost bonuses for the bankers - self-explanatory.
b: potential balance sheet issues. That loss could mean the bank is now overleveraged and regulatorily required to liquidare assets. It could also drive a bank into insolvency if there are poor risk management practices (think Silicon Valley Bank having to mark down bonds due to interest rates.)
Losing even a few hundred thousand a month in rent isn't that big of a deal in comparison.
- ChuckMcM 3y agoAgree with this. One of the more interesting things about following the NY AG trial against Trump is to get a peak into how banks "value" things and what they consider "good" or "not good". The overall value of a property is a function of its median rent, so it seems like if the landlord has no tenants but is asking for a high rent, that makes the property more valuable (algorithmically) than one with lower rents. That struck me as pretty wild but it is also clear why it is hard to get people convicted of misrepresenting values because pretty much there is a lot of "because I say so" in the rules.