Word: bonney
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Dates: during 2010-2019
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...Because it's in slow motion, people get this sense that it's really not happening. It is happening." To get a sense of just how the train wreck is unfolding, I took a tour last month of the warehouses and industrial parks of eastern Los Angeles County. Chris Bonney, the president of the City of Industry, Calif., office of commercial brokerage Lee & Associates, was my guide (and my driver). With the phenomenal growth of foreign trade passing through the ports of Los Angeles and Long Beach in recent decades, City of Industry, Pomona and their neighbors had become distribution...
That's one common predicament. A few miles to the east, Bonney pointed out a dusty lot that represented another stage of real estate pain. The bank that financed the purchase of the lot had decided to bite the bullet and take possession of it rather than give the developer a construction loan for a building no one would occupy. There already was a newly constructed - and empty - building across the street. The bank that made the construction loan for that building would soon have to decide whether to "extend and pretend," as the industry saying goes, or take...
Industrial properties are just one segment of the commercial market - the others being offices, retail sites, apartment buildings and hotels. But the problems Bonney showed me apply across the board. First, commercial mortgages are about to hit a refinancing wall. Deutsche Bank's Parkus estimates that more than 65% of the loans that have been packaged into commercial mortgage backed securities won't qualify for refinancing when they come due. Second, banks are already facing painful choices about what to do with short-term land and construction loans that will never be paid off in full. Finally, the vulture investors...
...orderly fashion. It also averts a big hit to the FDIC's empty insurance fund. The downside is that it drags out the correction for years, delaying any rebound. "The smart money, and there is plenty on the sidelines, is waiting for the bottom to materialize," says Bonney. It may still be waiting a year from...