Real Estate

Big Banks Are Trying to Dump Commercial Real Estate Debt As Pressure Mounts

  • Big banks are trying to dump commercial real estate loans as pressures mount in the sector. 
  • JPMorgan, Goldman Sachs, and Capital One are among those trying to shed debt exposure, sources told Bloomberg.
  • Some banks are having trouble securing buyers, and have been holding onto loans as they search for a deal.

Big banks want to some of their commercial real estate loans, but buyers are proving scarce as troubles pile up in the sector, according to report out from Bloomberg this week.

JPMorgan, Goldman Sachs, Capital One, and M&T Bank are among firms trying to whittle down their commercial real debt holdings, sources familiar told Bloomberg this week, but have been struggling to find many interested buyers.

Banks could be willing to sell property loans

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Miami Beach condo owners face big costs imposed by investors

Daniel Fiorda moved out of his 800-square-foot condo in Miami Beach last month, more than two decades after he bought it.

He didn’t want to leave his canal-front slice of paradise. But after a real estate firm purchased six of his building’s 10 units, took control of the board and increased maintenance fees by more than four times — a jump for Fiorda from about $550 to $2,280 a month — he and his wife, Laura Ines Cobos, were in a bind.

Fiorda, an artist and musician from Argentina, began taking odd jobs to try to keep up. But ultimately, the couple moved into a rental in Biscayne Park and found a tenant to live in their Miami Beach home. The tenant is now paying $2,100 a month — still less than the cost of their condo fees, which are on top of mortgage payments.

“They want us to be

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Real Estate

Billions of Dollars of Bad Real-Estate Debt Could Mean Big Bank Losses

  • Lenders, including major banks, are expanding their provisions to guard against loan losses.
  • The rapidly growing reserves reflect concerns about the health of commercial-real-estate debt.
  • The provisions put a drag on earnings, curtail lending, and could spur a cash crunch for some banks.

This earnings season, some major banks bucked tumult in the sector by raking in record revenues and surpassing Wall Street expectations.

But a blemish is building on the balance sheets of a growing number of financial institutions, in the form of cash reserves that banks and other lenders are required to collect against expected loan losses — including souring debts tied to commercial real estate. 

The reserves, stagnant money that doesn’t earn a return, place a drag on earnings, curtail lending, and show how hundreds of billions of dollars of problem real-estate assets, such as office buildings, are beginning to inflict wider financial damage.

The US’s four

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