Gillian Tett: America’s commercial real estate - ‘pretend and extend’ need to end


That Canadian insurance company known as Manulife does not often attract attention. This week, however, it caused a frisson in the real estate world.

 Shortly before Jay Powell, Federal Reserve chair, announced that the central bank was keeping benchmark rates at 5.25 per cent to 5.5 per cent, Colin Simpson, Manulife’s chief financial officer, revealed that the group had written down the value of its US office investments by 40 per cent from a pre-Covid peak. 

However, Wednesday’s Fed meeting underscored a key point: Powell’s priority now is not to protect CRE, but to keep inflation under control

 Newmark estimates that there is now around $1.3tn of troubled CRE debt, of which $670bn matures in the next two years.

Around a third of this debt pile was originated when rates were rock-bottom in the pandemic

Gillian Tett 21 March 2024

Expend and pretend - Banks need to prepare


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