Commercial RE at Fire Sale Prices

[svelte]

Well, the $100K is a teaser all right. I didn’t believe it when I read it either.

You have to dig a little deeper into the article to see what they are really saying is that buyers are putting in some cash and assuming the debt on these properties:

…they are selling skyscrapers at a drastic discount, with the condition that the new buyer take on the enormous amounts of debt connected to the properties.

I’m assuming that means someone got that 40 story building + a mountain of debt for $100K.

[patientrenter]

[quote=Dougie944]I have to call BS on this story even though I agree with the commercial property values are falling theme.

The John Hancock Tower in Boston was a very high profile auction. In 2006 it was purchased for $1.3 billion. This year it auctioned for $660 million. The article claims it sold for $20 million. I got the real price with about 1 minute of research. That is not even remotely close so I question the accuracy of the rest of the article.

A lot of these commercial real estate funds are buying up the debt in order to step in and acquire the properties when they default. I assure you nobody is acquiring 40 story skyscrapers in NYC for $100,000.[/quote]

I wonder if the ultimate purchasers really assumed the debt. If I assume a debt, then that means I have to pay it off…. whether I make money or not, whether I want to, or not. Perhaps the buyers here put down $20 million, and the intermediate corporate entity that legally purchased it for them took on the debt, with no recourse to the ultimate real buyers. If that is the case, then they really did pay only $20 million, albeit for an encumbered asset. I am getting more and more skeptical of confusion between asset prices supported by real money, and asset prices supported by monopoly money that is really non-recourse loans that will only be paid off if we have future asset price bubbles.

[patientrenter]

[quote=Dougie944]I have to call BS on this story even though I agree with the commercial property values are falling theme.

The John Hancock Tower in Boston was a very high profile auction. In 2006 it was purchased for $1.3 billion. This year it auctioned for $660 million. The article claims it sold for $20 million. I got the real price with about 1 minute of research. That is not even remotely close so I question the accuracy of the rest of the article.

A lot of these commercial real estate funds are buying up the debt in order to step in and acquire the properties when they default. I assure you nobody is acquiring 40 story skyscrapers in NYC for $100,000.[/quote]

I wonder if the ultimate purchasers really assumed the debt. If I assume a debt, then that means I have to pay it off…. whether I make money or not, whether I want to, or not. Perhaps the buyers here put down $20 million, and the intermediate corporate entity that legally purchased it for them took on the debt, with no recourse to the ultimate real buyers. If that is the case, then they really did pay only $20 million, albeit for an encumbered asset. I am getting more and more skeptical of confusion between asset prices supported by real money, and asset prices supported by monopoly money that is really non-recourse loans that will only be paid off if we have future asset price bubbles.

[patientrenter]

[quote=Dougie944]I have to call BS on this story even though I agree with the commercial property values are falling theme.

The John Hancock Tower in Boston was a very high profile auction. In 2006 it was purchased for $1.3 billion. This year it auctioned for $660 million. The article claims it sold for $20 million. I got the real price with about 1 minute of research. That is not even remotely close so I question the accuracy of the rest of the article.

A lot of these commercial real estate funds are buying up the debt in order to step in and acquire the properties when they default. I assure you nobody is acquiring 40 story skyscrapers in NYC for $100,000.[/quote]

I wonder if the ultimate purchasers really assumed the debt. If I assume a debt, then that means I have to pay it off…. whether I make money or not, whether I want to, or not. Perhaps the buyers here put down $20 million, and the intermediate corporate entity that legally purchased it for them took on the debt, with no recourse to the ultimate real buyers. If that is the case, then they really did pay only $20 million, albeit for an encumbered asset. I am getting more and more skeptical of confusion between asset prices supported by real money, and asset prices supported by monopoly money that is really non-recourse loans that will only be paid off if we have future asset price bubbles.

[patientrenter]

[quote=Dougie944]I have to call BS on this story even though I agree with the commercial property values are falling theme.

The John Hancock Tower in Boston was a very high profile auction. In 2006 it was purchased for $1.3 billion. This year it auctioned for $660 million. The article claims it sold for $20 million. I got the real price with about 1 minute of research. That is not even remotely close so I question the accuracy of the rest of the article.

A lot of these commercial real estate funds are buying up the debt in order to step in and acquire the properties when they default. I assure you nobody is acquiring 40 story skyscrapers in NYC for $100,000.[/quote]

I wonder if the ultimate purchasers really assumed the debt. If I assume a debt, then that means I have to pay it off…. whether I make money or not, whether I want to, or not. Perhaps the buyers here put down $20 million, and the intermediate corporate entity that legally purchased it for them took on the debt, with no recourse to the ultimate real buyers. If that is the case, then they really did pay only $20 million, albeit for an encumbered asset. I am getting more and more skeptical of confusion between asset prices supported by real money, and asset prices supported by monopoly money that is really non-recourse loans that will only be paid off if we have future asset price bubbles.

[patientrenter]

[quote=Dougie944]I have to call BS on this story even though I agree with the commercial property values are falling theme.

The John Hancock Tower in Boston was a very high profile auction. In 2006 it was purchased for $1.3 billion. This year it auctioned for $660 million. The article claims it sold for $20 million. I got the real price with about 1 minute of research. That is not even remotely close so I question the accuracy of the rest of the article.

A lot of these commercial real estate funds are buying up the debt in order to step in and acquire the properties when they default. I assure you nobody is acquiring 40 story skyscrapers in NYC for $100,000.[/quote]

I wonder if the ultimate purchasers really assumed the debt. If I assume a debt, then that means I have to pay it off…. whether I make money or not, whether I want to, or not. Perhaps the buyers here put down $20 million, and the intermediate corporate entity that legally purchased it for them took on the debt, with no recourse to the ultimate real buyers. If that is the case, then they really did pay only $20 million, albeit for an encumbered asset. I am getting more and more skeptical of confusion between asset prices supported by real money, and asset prices supported by monopoly money that is really non-recourse loans that will only be paid off if we have future asset price bubbles.

[Author]

Posts