More Worries About Commercial Real Estate; NIMBY Wars; Dollar General's IPO (Wednesday's News & Notes)

More people are worrying about commercial real estate. A Reuters piece from earlier this week features comments from Jon Greenlee, associate director of the Fed's Division of Banking Supervision and Regulation.

Greenlee, remember, testified in a hearing before Congress in July on the precarious state of commercial real estate. What makes me worry about these kinds of hearings is that the logic of them is to put pressure on Congress to give the financial system (or developers) government aid. Is that really what we want?

Puffing up the threat commercial real estate poses to the system could lead to unnecessary bailouts and taxpayers being on the hook for losses that should be recognized by Wall Street. The logic of where we're headed is that no one should take any losses for the highly-leveraged bad bets on properties with inflated values that took place. I think losses need to be recognized and while the process may be painful, we shouldn't avoid it by having another bailout enacted.

Here are some other recent news and notes about retail and retail real estate.

  • The Llenrock Blog reviews Saint Consulting's new book, Nimby Wars. Saint Consulting specializes in land use politics consulting and the book summarizes some of the lessons the firm has learned over the years. The review gives a good sense of the book's contents and says it is a must read for developers.
  • There's been a recent meme on a couple commercial real estate blogs and sites recently about how today is different than the commercial real estate crash in the early 1990s. Square Feet blog does an excellent job putting all the posts together in one place and summarizing the arguments.
  • We published Realpoint's monthly look at CMBS delinquencies here. This Bloomberg piece looks at the numbers from Reis Inc. Both outlets say that CMBS delinquencies and defaults hit a new high in the third quarter.
  • The Wall Street Journal reported on Developers' Diversified's TALF deal. The shopping center REIT obtained a $400 million loan from Goldman Sachs secured by 28 properties that was to be converted into a CMBS offering through TALF. The Fed is reviewing the deal now. The story indicates that it is likely to approve the transaction.
  • Calculated Risk takes an informative look at the different commercial real estate indexes. The blog opted to do this after conflicting data emerged from different indexes in recent days. A monthly price index showed continued deterioration in commercial real estate pricing while the latest transaction-based index showed a surprising spike in values. The post explains how that happened.
  • More details emerged about Dollar General's pending IPO. It will offer 34.1 million shares priced between $21 and $23 per share.
  • The Wall Street Journal reported that Blackstone will pay $195 million for stakes in some Glimcher malls.
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