Mortgage default near for 2 Irvine Co. office towers?

[Anonymous_IHB]

<A href="http://lansner.freedomblogging.com/2009/09/03/mortgage-default-irvine/35317/">http://lansner.freedomblogging.com/2009/09/03/mortgage-default-irvine/35317/</A>

 

[morekaos_IHB]

Even Don Bren can step in it.

 

[graphrix_IHB]

Meh, I double posted this. But... I added some snark, so I will leave it there.

 

[acpme_IHB]

i think this isn't as bad as it sounds for TIC. they are simply doing the same thing everyone else doing. hand in the keys on your underwater property... or more likely, threaten to do so. there's a difference between not having positive cash flow to make payments (maguire) vs deciding they'd rather give up the property and hoard their cash (irvine co). it might just be the smarter capital allocation strategy if they believe there'll be better opportunities to play gravedigger after the dust settles in CRE.



the only repercussion will be to their reputation if they have to eat their "never returned a property in our 145 yr history" statement. but what do they care, really.

 

[Joe33_IHB]

They have a ton of assets that are deep underwater. Their entire purchase of that Equity Office San Diego portfolio is worth a fraction of what they paid. Also their purchase of Archstone's San Diego County and Orange County apartment portfolios are worth a fraction of what they paid. Both of those portfolios are worth far likely worth far less than the debt on them. Anything bought in 2005 to 2007 in Commercial RE is probably worth less than the debt, unless you had very low leverage. These big portfolio buys by Irvine Co did not have low leverage.

 

[xoneinax_IHB]

[quote author="acpme" date=1252034845]the only repercussion will be to their reputation if they have to eat their "never returned a property in our 145 yr history" statement</blockquote>Sounds a bit snarky to have those words in the TIC response

 

[usctrojanman29_IHB]

I'd bet my pinky finger that these loans are non-recourse so why not throw the keys back at the lenders if the property is underwater and/or throws off negative cash flow. Not like banks will stop lining up to lend to TIC even if they default on these loans.

 

[usctrojanman29_IHB]

[quote author="morekaos" date=1252021204]Even Don Bren can step in it.</blockquote>
He's a kool-aid drinker just like almost every other real estate investor/developer.

 

[Oxtail_IHB]

If we really do see TIC return underwater property, what kind of signal does that send to strapped homeowners who are underwater? 2008/2009 will mark the triumph of moral hazard.

 

[OCCOBRA_IHB]

And that, my liege, is how we know the Earth to be banana-shaped.

 

[usctrojanman29_IHB]

[quote author="Oxtail" date=1252056376]If we really do see TIC return underwater property, what kind of signal does that send to strapped homeowners who are underwater? 2008/2009 will mark the triumph of moral hazard.</blockquote>
I doubt they give a rats arse what other people think, including lenders. The same lenders that'll throw the keys back to will be back knocking on their door to give them more loans in 3-5 years. The more things change, the more they stay the same.