折叠的风还是吹到了江湖 | 8k8 com login register | Updated: 2024-08-17 19:41:15
Regional banks in the US are facing tremors as they have yet to be paid back more than $1 trillion in outstanding loans linked to commercial real estate, which is under strain from a glut of empty buildings after the COVID-19 pandemic.
The regional banks provide a vast number of real estate loans for the commercial real estate market across the country. But the industry has seen higher interest rates that have affected property values.
New York Community Bank in Hicksville, New York, saw its stock fall more than 40 percent on Wednesday.
The beleaguered bank said it will receive a $1 billion equity investment. At least $450 million of the money will come from former US treasury secretary Steve Mnuchin's company, Liberty Strategic Capital. Mnuchin served under former president Donald Trump. The rest will come from investors.
The lender sought the cash infusion after it said on Feb 29 that it had identified higher-than-expected losses in the fourth quarter of $2.4 billion, in part because of real estate loans on office and apartment buildings.
It is estimated that regional banks hold about $1.4 trillion of the $2.6 trillion of commercial real estate loans that will mature from this year up to next year. They are linked to office buildings, apartment buildings, hotels and retail spaces, according to Trepp, a real estate data company.
However, at least 14 percent of all commercial real estate loans and 44 percent of office loans are worth less than their debt, research by the National Bureau of Economic Research shows.
Many of the loans are maturing as millions of office workers in large and small areas across the country are still working from home, or in a hybrid capacity, which has led to landlords facing difficult times, including seeing the value of office buildings nosedive.
Stijn Van Nieuwerburgh, a professor specializing in real estate at Columbia Business School in New York, said he believes the value of US office buildings will plunge 40 percent by 2029 or $411 billion.
Landlords are having to adjust everything from expenditure to incentives to retain tenants amid changing times, Van Nieuwerburgh said. "Tenants are either not renewing leases or renewing leases but taking less space."
Failure by owners to pay their debts could have far-reaching consequences for the banks. Analysts fear it is not if, but when, that these problems will hit the market. Loans tend to be five to 10 years in term.
On March 1, shares of Valley National Bank and Columbia Banking System fell more than 2 percent. Both banks have large real estate loan portfolios. Their commercial real estate holdings as a proportion of total risk-based capital are above 300 percent.
Cracks first began to appear in the small banking sector last year after Silicon Valley Bank failed. It led to several other banks buckling.
To stabilize the entire sector, the Federal Reserve established the Bank Term Funding Program, which helped distressed lenders get low interest loans. But the program was scheduled to end on Monday.
New York Community Bank bought one of the affected banks, Signature Bank, last spring. It helped the NYCB grow to more than $100 billion in assets.
The NYCB is a major lender for rent-stabilized landlords in New York City. More than half its total multifamily loan portfolio is secured by properties in New York state, subject to rent regulation laws, Reuters reported.
While larger banks such as Deutsche Bank, Bank of America and JPMorgan Chase have set aside a budget to tackle their real estate loan debts, the outlook is different for smaller banks.
Bigger portions
They tend to have bigger portions of their loan portfolios in commercial real estate than big banks do. For banks with more than $100 billion in assets, commercial real estate loans account for 13 percent of total credit; but for smaller banks, it is 44 percent of credit.
The delinquency rates on commercial mortgage-backed securities are expected to rise to 8.1 percent this year, according to credit rating agency Fitch, as many companies struggle to convert remote — and hybrid-working employees.
The Federal Reserve said it is working with the banks to tackle any upcoming issues.
Last month, Treasury Secretary Janet Yellen said at a congressional testimony, "Commercial real estate is an area that we've long been aware could create financial stability risks or losses in the banking system, and this is something that requires careful supervisory attention."
Jerome Powell, the Fed chair, told the CBS news program 60 Minutes last month that the problem was "manageable", and "it doesn't appear to have the makings of the kind of crisis things that we've seen sometimes in the past, for example, with the global financial crisis".
"There's some smaller and regional banks that have concentrated exposures in these areas that are challenged. And, you know, we're working with them," he added.
Regional banks could be forced to sell loans at a loss. But that will not work for all, especially loans on properties now valued 50 percent to 75 percent below their valuations at the time loans were taken out. Other regional banks may be forced to close or merge, Powell said.