The banking sector is under pressure with Aozora Bank's stock plunging over 30% after reporting a surprising loss on Thursday due to bad loans made to US commercial properties, nearly hitting its limit down yesterday. Regional banks are similarly affected, with concerns over their commercial real estate loan portfolios, as commercial REITs trade at over 100 times declining earnings. The crisis in commercial real estate is spilling over to banks that lent heavily to the sector, with higher US interest rates and the pandemic-induced shift to remote work creating adverse conditions, particularly in the US office market. The cracks in the market are widening, affecting everything from offices to apartment complexes, with more than $67 billion of housing potentially distressed. Banks are also grappling with trillion-dollar mortgages at 3% interest from 2021, now devalued as rates have climbed to 6% and property values have sunk below their 2021 levels. NYCB's real estate loans are notably problematic due to its exposure to New York City's rent-stabilized apartment sector, which has seen values plummet following a change in city rent laws.
Banks look like shit yet the market is at all time highs ๐คทโโ๏ธ โThe ghosts of last year's regional bank collapse still haunt the banking sectorโ https://t.co/LeE4H3jDwy
Lots of articles pointing to NYCB's real estate loans as problematic. But need to go a layer deeper. NYCB has deep exposure to New York City's troubled rent stabilized apartment sector, which saw values tumble after recent change in city law related to rents.
Banks are in trouble. They have trillion dollar in mortgages at 3% which were all sold in 2021. Rates are now 6% and these property values are now below 2021. Not good.
'The cracks in the commercial real estate market are widening from offices to apartment complexes, with more than $67 billion of the housing potentially distressed as borrowers struggle to repay loans extended during the height of the pandemic.' https://t.co/TU2sgNxCPt https://t.co/iaFCiR9VQA
The cracks in the commercial real estate market are widening from offices to apartment complexes https://t.co/FPMatfkDlJ
Commercial Real Estateโs Slow-Motion Crisis Explained https://t.co/PPZkXe9fJb https://t.co/ORvXEth7rm
Bracing for the commercial real estate 'reckoning' https://t.co/05cajWYA4C https://t.co/FrbCDqZsma
Commercial real estate crisis in the US is back. It never really went away. ๐บ๐ธ๐ข๐ https://t.co/vD2F0KwsTV
.@pboockvar reports: Aozora Bank announced a surprising loss Thursday because of their exposure to US real estate. "Due to higher US interest rates and a shift to remote work accelerated by Covid-19, the US office market continues to face adverse conditions combined withโฆ
A slow-motion crisis in commercial real estate is spilling over to the banks that lent heavily to the industry during the good times. Here's how it went wrong https://t.co/gyn4GfPOfk
Banking sector faces renewed concerns over US commercial property market amid rising losses https://t.co/qG7d5l7Gxg https://t.co/FaARZkrFq7
Regional banks imploding on worries about their commercial real estate loan portfolios. Makes sense, until you see commercial REITs trading at 100x+ (declining) earnings.. @WallStCynic @assouline99 @HedgeyeREITs https://t.co/YWq5nW9lqm
Aozora bank is now down over 30% after making bad loans to US commercial properties. Was almost limit down yesterday... https://t.co/IcgTOTcql5