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What is indicative of market value is the fact that the auction yielded no better buyer. These stories about huge markdowns of commercial real-estate are not s

What is indicative of market value is the fact that the auction yielded no better buyer. These stories about huge markdowns of commercial real-estate are not surprising. This case is indicative of the predicted instability in local and regional banking sector. Pinnacle Bank Texas is a part of a regional bank that is badly exposed in commercial real-estate, where borrowers are defaulting left and right. There is something approaching $1 trillion in commercial real-estate mortgages coming due this year, and much of it can't be feasibly refinanced due to prevailing interest rates, vanishing tenants and other problems. 2024 is going to get interesting. My prediction is: it's an election year, and The Powers That Be don't want a big banking blow-out, so there's going to be bail outs, the national banks are going to be pressured to clean up some of the mess, etc. More consolidation, more public debt, more kicking the can.

01100011 2y ago
> something approaching $1 trillion in commercial real-estate mortgages coming due this year, From what I hear, you'll just see a lot of loan modifications and adjustments. Basically no one wants mass defaults to happen. Not saying there isn't some other hidden issue in the financial system, but CRE isn't going to be the thing that brings it down.
nostromo 2y ago
A few region banks may fail, but they’ll be bailed out just like SVB.
- theturtletalks 2y ago
  Was SVB bailed out? I thought they were over leveraged, but had customer’s funds and gave those back. Did I miss something?
  - dpe82 2y ago
    They were not. The bank failed; FDIC came in and shut them down and then sold the remaining assets to First Citizens. Previous SVB shareholders were wiped out. That's how the system is supposed to work.
  - nostromo 2y ago
    It depends on your definition. The bank itself wasn't bailed out, but the customers and other banks were. The FDIC was expanded from 250k to infinity and the Fed created BTFP, which allows banks to borrow against their treasuries (which had declined dramatically in value). This all comes at the cost of the general public.
conductr 2y ago
The risk adjustment in Fort Worth is they can convert it to condos/apartments and likely do just fine even with the extra investment to make those improvements. This is what’s happening on the Dallas side where our downtown is over saturated with office buildings that no one wants.

01100011 2y ago

> something approaching $1 trillion in commercial real-estate mortgages coming due this year, From what I hear, you'll just see a lot of loan modifications and adjustments. Basically no one wants mass defaults to happen. Not saying there isn't some other hidden issue in the financial system, but CRE isn't going to be the thing that brings it down.

nostromo 2y ago

A few region banks may fail, but they’ll be bailed out just like SVB.

theturtletalks 2y ago
Was SVB bailed out? I thought they were over leveraged, but had customer’s funds and gave those back. Did I miss something?
- dpe82 2y ago
  They were not. The bank failed; FDIC came in and shut them down and then sold the remaining assets to First Citizens. Previous SVB shareholders were wiped out. That's how the system is supposed to work.
- nostromo 2y ago
  It depends on your definition. The bank itself wasn't bailed out, but the customers and other banks were. The FDIC was expanded from 250k to infinity and the Fed created BTFP, which allows banks to borrow against their treasuries (which had declined dramatically in value). This all comes at the cost of the general public.

conductr 2y ago

The risk adjustment in Fort Worth is they can convert it to condos/apartments and likely do just fine even with the extra investment to make those improvements. This is what’s happening on the Dallas side where our downtown is over saturated with office buildings that no one wants.