…and so it begins

Anything purchased in nyc is a terrible investment, the only way these mega landlords make it work is with large capital. Money was cheap so they barrowed like crazy. Some of these idiots went with adjustable mortgages lol.

And they just got rekt

Sounds like a strategic default. Remember kids, there's no shame in defaulting on a loan if it's done strategically.

BTW, does anyone know how to bypass the Bloomberg paywall?

12ft.io does not seem to work with Bloomberg.

Is that why there is crazy push at Amazon to force everyone back of office, so these idiots can pay their bills?

I'm going to strategically buy Allianz PUTs on margin (parent company of PIMCO) and if I lose the bet it's fine because it was done "strategically"

That and so everyone can keep their tax credits from local governments.

Wasn’t even a good idea to begin with

Oh you are not kidding.

Fuck yeah let's go.

If you're going to post a paywall, at least copy and paste the article.

Article:

An office landlord controlled by Pacific Investment Management Co. has defaulted on about $1.7 billion of mortgage notes on seven buildings, a sign of widening pain for the industry as property values fall and rising interest rates squeeze borrowers.

The buildings — in San Francisco, New York, Boston and Jersey City, New Jersey — are owned by Columbia Property Trust, which was acquired in 2021 for $3.9 billion by funds managed by Pimco. The mortgages have floating-rate debt, which led to rising monthly payments as interest rates soared last year.

“We, like most office owners, are addressing the unique and unprecedented challenges currently facing our asset class and customer base,” Justina Lombardo, a spokesperson for Columbia Property Trust, said in an emailed statement. “We have engaged with our lenders on a restructuring of our loan on seven properties within our larger national portfolio. We look forward to a collaborative process yielding thoughtful solutions that reflect current market conditions and best serve the interests of all stakeholders.”

Pimco declined to comment.

A San Francisco building at 650 California St., built in 1964, is the most valuable property in the portfolio at $479 million, according to 2021 figures. Other properties include 229 W. 43rd St., 245-249 W. 17th St. and 315 Park Ave. South in Manhattan, 201 California St. in San Francisco, 116 Huntington Ave. in Boston and 95 Christopher Columbus Drive in Jersey City.

relates to Pimco-Owned Office Landlord Defaults on $1.7 Billion Mortgage 315 Park Ave. South in New York.Photographer: Eric Laignel/BussinessWire US offices, particularly older buildings with fewer amenities, have struggled in recent years with the rise of remote work during the pandemic and recent layoffs. Values of those properties have fallen 20% since the onset of the pandemic in March 2020, according to Green Street.

Landlords including Brookfield Corp. have defaulted on office mortgage payments. In some cases, the owners have considered walking away from the properties rather than continuing to pour money into them. Still, the delinquency rate for commercial mortgage-backed securities for offices is still relatively low, at just 1.83% in January, according to Trepp.

The seven buildings owned by Columbia Property Trust were appraised at $2.27 billion in 2021, according to loan documents on a $485 million CMBS that financed part of the debt. Goldman Sachs Group Inc., Citigroup Inc. and Deutsche Bank AG funded the original debt of almost $1.9 billion.

Representatives for Goldman and Deutsche Bank declined to comment. A spokesperson for Citigroup didn’t immediately reply to requests for comment.

Will do next time, sorry.

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I paste the link into Archive.is

Ok, thanks!

So how many people gonna be unemployed?

Hence everyone from the Governor to the Mayor wants companies to force RTO! Mayor Adams recently said he does not like the idea of "people working from home, in their pajamas!". They want to save the multi-billion dollar landlords and their steel and glass skyscrapers.

I mean that’s the American government at work. Protecting profits for private businesses is as old as drinking milk at school.

Thanks from me as well, I learn something new on WSB every day.

This is awesome. Thanks for 12ft.io

I have a few loans I need to default on, teach me how

Imagine how painful these loans are while listening to “higher for longer” from the fed.

And I hate it… but it kinda works, just ignore the consequences!

Don’t forget all the toll roads, parking lot taxes and restaurants

Buy everything you need to for the next 5. Squirrel everything away. A $10 here, a $100 three, a boat or ten owned by your doggies, a business owned by your parrot… and than call up the bank and notify them you are broke because you can not manage money.

Problem solved!

At least we don't have to go to war to protect business profits

I could never imagine that! Man it would be a scary place if someone like, let’s say, Halliburton got a plant in the white house.

Just a small mortgage...

Correct. A lot of people who invest in real state this way are facing losses due to remote work and sick employees...

Do they search your house when you declare bankruptcy?

Got pay walled 😡

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I guess they couldn’t refinance their payments at a better rate. Ouch

Just lock the door??

Who cares? They took a risk, and lost. They don't "deserve" to have guaranteed returns...

I can’t afford a lock

Also tied to twitter's landlord.

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Right! But this push to protect the wealthy landlords and corporations is what caused a push to return to normal and do away with covid mitigations way before it should have been ok.

The end result is a lot of sick employees and mounting losses..

Whatever..... The likely winners out of all this will probably be insurance companies

Maybe cut down on the avocado toast?

Hang a sock on the door knob, they’ll know your wife and her boyfriend are busy and leave you alone

You have a house and are asking us for finically sound advice? Jokes on you! I live in a box underneath a factory beside a river by a swamp… shits fucked, but I get cool water with a green glow to light my shit at night! I haven’t needed drugs from the copious amounts of fumes, and I’m pretty sure I ate my dog… so just knowing you have a house makes me think you know a sit ton more about budgeting than I! Asides, they wouldn’t want to search my shit even if they could find or recognize me!

Signed off, Pickle Rick with pickle Dick.

This is so cute

I mean, yea. But, we have a kind of weird global economy, where if the business property market (which are backed with asset shares, just like the mortgage bubble in 08) was to turn into a bubble, and burst, the markets tank, people lose their jobs etc. In this economy we need property houses high, to maintain the markets and keep jobs, but also low, so people can start businesses and you know, have somewhere to live.

The system is broke as fuck quite frankly!!

pharma

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I can’t fathom a business paying for employee meals, lattes, snacks, and the myriad other perks offered. That’s nuts. No wonder the balance sheet drastically improved. You really need all that extra stuff to compete for fintech employees?

They are still getting rekt.

Can an implosion is the commercial real estate market seep into the residential market? Somehow I think yes

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You are witnessing Financial Collapse in real time.

he already changed his mind for the upcoming union contract

I mean. It would have to wouldn't it?

Workers live by work. If there is no work at the place of work then there is no point to being by work.

This is not correct. There are many deals with cities and states to employ xyz number of people in the area. It’s why some companies didn’t allow people to relocate after moving to remote work.

>Columbia Property Trust

for NYC one of the buildings was twitter and the other ones were older buildings

​

in NYC all the older buildings are going bankrupt and companies are coming to newer offices with hotel seating. the older buildings are hard to run ethernet, wifi and other modern tech in and the newer ones are built with new tech in mind along with more natural light

Nah, there are a lot of them that have an employee minimum. We used them at my old job and if we didn't keep. Say 25 people at the location for 3 years we had to back pay the tax abatement in full with interest.

Yeah, but the Fed has been in the business of socializing losses and guaranteeing returns for like 23 years.

So I'm skeptical that's going to change.

They don't want you having a nice life.

They want you making money for other people, spending everything you earn (and then some), and paying a ton of taxes.

But if the argument is ',the reason these building are going bankrupt because they aren't modern' I don't think it holds water because all these building have adjustable rates which makes the monthly mortgage payments jump higher and higher.

I rent a duplex

A strategic default is when you have a loan on an asset but the loan costs more than that asset is worth so you stop paying the loan. With you not paying your loan it frees up money to do other things.

Example: If you have a $500k loan on a house that is worth $400k you stop paying your mortgage and live rent free for a year (while they evict you) to build up cash. Then rent a house across the street and wait a year or two and then buy another house and do it again.

Thanks

Wouldn’t you just get sued and get your wages garnished?

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If I Had My Way I'd Tear This Building Down

The push is coming from the banks. Banks own all the loans for commercial real estate, and were the first entities pushing for back to office.

Banks also tend to be board members and significant share holders in public companies and could internally push for back to office to protect their loan assets.

This is the point though.

They WANT demand for things like vacations and home renovations to go down. They WANT a recession because it will halt inflation.

Labor is by far your largest expense and work at home employees just bleed productivity.

Yeah cause your people. The trick they use is to be a corporation people.

Isn't that what Fred Trump did>?

Nope.

When you take a loan out for a house you secure it against the house.

You go through a formal process with the bank, which can take years and you hand the keys back to the bank.

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No. That would be highly illegal! Try not to own the house directly too!

When covid hit I defaulted my CCs, even though I never lost my job. Applied for covid relief and got it refinanced with no interest.

I kept like 10k worth of shit I could not afford.

Pimco....where the pimps go.

Yep I work at a FAANG, and not the shitty one. Nobody is going back. They can layoff deez nuts. I'll never go to an office again.

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Depends. Good gains there on that industry though. Especially the ones dealing with mrna tech because it's so fucking versatile it can be adapted to any illness (including cancer treatment which is showing some good promise so far) so we'll see flu vaccines using mrna tech and they WILL have better efficacy rates compared to traditional vaccines (traditional vaccines usually have 50-60% efficacy)

There are just as many showing a huge drop-off in productivity. At best, I think WFH can work well for highly paid goal oriented engineers. For most positions though, it's proven to be a drain, which is why so many companies are reversing course.

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https://www.cnbc.com/2023/02/24/big-city-restaurants-bars-hybrid-work.html

city be losing money thus all these mayors is shitting their pants

https://www.cnbc.com/2023/02/24/big-city-restaurants-bars-hybrid-work.html

they want to go back to the office 'cause mayors of big cities is shitting bricks. even with hybrid work, down town just ain't making enough money (tax)

ngl my dirty mind has read "PimpCo" many times

Wsb is an education hub

Not a bad place to be.

True statements. The logic follows. I want to live by work.

Damn I’ve always worked in a field that has to be done in a centralized location. I guess I just didn’t know how it is. Thanks for the explanation. It was very direct and eye opening. I guess I just can’t imagine employers bending over like that for talent. DAMN

Flipping A. Keep up the good work redditor bro

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Let me stop working so I can read these studies about how productivity soared. Any links?

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What was avocado toast before avocado toast. Like what was the bogeyman that preceded avocado toast?

The issue is that a lot of these loans can’t cover debt service since their rates are variable and have gone up from maybe 4% a year to 8% a year. So if they were covering at a 1.2 debt service ratio it’s now a 0.6 with no optimism in sight. This lets the lenders rebalance you for a whole year of debt service, and a lot of guarantors don’t want to do that.

Yup and your credit tanks for 7 years and you can't buy anything anyways. Turning your business into a corporation is the only way to avoid that. There's downfalls to that too...especially for businesses with only 1 guy working.

Shit bro I should’ve done that back when it was available

Oh I think I wasn’t clear, I’m the rentoid and not the landchad

Better than being homeless again ig

2x productivity times 0 is still zero. The best have leverage, and if they want to work from home, the market is happy to oblige.

Yes, because "PIMCO-owned office landlord" decides the corporate HR policy at Amazon.

GIVE ME KARMA

companies got offered free loans and stole those funds. I thought the average WSB poster knew that in advance. When I read that, I went searching for which benefits could I ask and stole those funds too.

If you cant beat em...

I wonder which FAANG cuz I also work for a FAANG and people bitched but the company cracked down and everyone bent the knee.

People in my hometown were fraudulently getting covid funds and I wanted nothing to do with that and low n behold a few months/years later many are being prosecuted by the feds

I guess I didn’t know how to do it the right way so I just steered clear

Fannie and Mac allow for a new mortgage after 3 years if you have a 10% down payment.

After 7 years it all disappears like it never happened.

Dumbasses should have refinanced to a fixed rate in 2020

its illegal until microsoft or apple do it. lol. I defaulted on everything and here I am! Inflation doing it's job of erasing my personal debt. I got a 12 month interest free freeze and then an interest free refinance deal on everything. I just have to keep up with this payments for 1 more year and I'm debt free and its literally peanuts that get swallowed by inflation too. Next year I will be paying cents to the dollar.

​

Esentially, I owe the same nominal amount of money. Add my pay raise, substract inflation and I made out like a bandit. Fuck you, I got to be the wise guy here.

The F

That’s only if you’re a corporate person. For us normies it’s a sign we’re irresponsible shits trying to steal from everyone else.

Bullish. Print money to pay off the default

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I’m low key jealous

Local government budgets are about to burn. Hope they saved some of that relief money for a rainy day because they are going to need it.

Isn’t this what the entire NYC economy/401k system relies on?

Commercial rates never declined that much compared to residential rates.

Man, I thought I was so clever dumping cash in PLD thinking it's the easiest investment ever, then it tanked to below 100 bucks like 3 weeks after I bought in.

You can also just pay for empty buildings, if you just want to make sure idiots can pay their bills... no need to have people there.

> people lose their jobs etc.

People losing jobs doesn't have to be a bad thing.

What's worse, having them lose jobs and then we pay them for doing nothing / coming up with doing something useful?

Or paying them and they stay in their useless job?

The problem is that society chooses to stop paying the people who lose their jobs because 'it was their own fault' or something... And then people don't want to lose jobs but they keep doing stuff that's useless or even detrimental to society.

The bad thing happens is when people lose jobs but those were useful jobs.

The two sweetest words in the English language. De Fault.

I work in the utility industry and there would just be no chance to get hired back at double salary even if they’re not paying benefits. Something tells me I should switch careers

What’s kind of default would be considered strategic.

Yes. SF is having the same problem. Empty offices downtown and no one wants to return to commute thru human shit and car jackings.

If you pay attention the mayors from both cities have been in the news unsurprisingly pushing for companies to return to offices. Lol

Bypass Paywalls Clean extension works with Bloomy

We're about to see an "Evergrande Group" level collapse of revenue in Commercial Real Estate. The long term health of commercial real estate, especially office rental, is very very (very) speculative owing to A. Recession, B. Work from home. I've lamented my investments recently but I always remember to be thankful by saying: "at least I don't own any Commercial Office-Space". I don't know how these LLC's will pay their bills. They won't of course and we will see a whole new round of: "too big to fail" bailouts. It sucks.

Working from home hurts the economy lol. Way less spending

When you owe the bank $1 million it’s your problem. When you owe them $1.7 billion it’s their problem.

Anecdotal evidence:

Young people suck and take advantage of work at home.

Older people who have been in the workforce get more done and more effective (depending on roll).

Obviously, there are exceptions but seen this trend consistently.

I wish I had taken a loan to leverage and pay it this way. FUCK!

Why? The building didn’t do anything wrong. The Pension Fund Advisor overpaid and used the wrong capital structure (variable debt) to buy it. The bank will take it back and resell it to someone else at a revised mkt price to get their proceeds.

Thank you for your sacrifice, just let us know next time so we can buy puts.

>I can’t fathom a business paying for employee meals, lattes, snacks, and the myriad other perks offered. That’s nuts.

It's all bread and circuses. It's a lot cheaper to pay for lunch and little treats than it is to pay office drones a proper wage.

You seem to be too in touch with reality to ever be in a position to make any of those decisions.

Bigly advice!

Couldn't do that in my area. People are so land hungry stupid here they pay for insider information on any 2nd in a row missed payment or unpaid property tax so they can buy the loan or ask for courthouse steps property auction. Fuckers.

The real vacancy rate is even higher, as some employees only need to go to office twice a week,

It should lead to more condo conversions. That will help alleviate housing supply and rents.

Interesting thought

Of all the guys I know who divorced, only one didn't get taken to the cleaners by their ex.

He worked as a bartender, and every night at the end of his shift, he'd put $20 into a box that he never opened or told his wife about. Did it for a decade.

The rest of his tip money covered his living expenses, and the money that hit his account from wages was spent on guns, gold, and rare liquor bottles that he had a side hustle trading in.

He's a disabled vet with a pretty high disability rating so he also had a nice income stream that was untouchable in a divorce proceeding.

His wife was a stripper then later a waitress who spent every dollar she made pretty much as soon as she made it.

Never had a kid with her and when they got divorced he had like $1k in the bank and $5k of credit card debt. They split amicably and decided they didn't have enough assets to divide so went their separate ways.

In reality, he had about $60k cash in the house and guns/gold/spirits worth another $200k.

He's on his second wife now and I'm pretty sure she's unaware as well but at least she's much better with her money and understands the concept of savings.

Here’s a thought. Turn them into apartments so people can afford to live.

Welcome to 2008 ladies and gentlemen .

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Not a good place to be.

https://github.com/iamadamdev/bypass-paywalls-chrome

Just a dream of seeing less ugly, crappy, disease ridden buildings is all.

That would definitely benefit the economy overall. Gonna make people working in trades raking in money

Beanie Babies?

Rip to all the landlord on adjustable mortgage lmao 🤣

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Mouse Farts!!!