Willy Walker: "Crisis Averted in commercial real estate"

CNBC Interview with Willy Walker of Walker & Dunlop: 

Here's what he said: 

1) Mr .Walker sees improvement coming in CRE and claims "crisis averted" 

2) Delinquent rates stayed stable in August as some loans were cured while new defaults rose;  

3) Cost of permanent debt is down after recent rate cuts; 

Weitz: Sorry. Not buying it. Way too soon to claim victory. We still have sky high delinquencies and fundamental concerns across all sectors of the economy. As the old saying goes, "don't ask your barber if you need a haircut". I believe Mr. Walker is hoping for a recovery rather than truly seeing one. Perhaps I'm wrong but I simply don't see an immediate 'U-turn' based purely on a 50 basis point cut in rates considering where we were rates wise 3-4 years ago. Time will tell - I'm excited to see where it goes. 

 

CNBC interview with Rick Caruso on CRE prospects

 

OVERVIEW

See interview with Rick Caruso, founder of ‘Caruso’. He’s a major player in the Los Angeles area Commercial Real Estate market who lost a bid for Mayor of Los Angeles in the recent years.

Caruso takes:

“I don’t think we’ve seen the bottom [of office sector] has hit…it’s not about going back to work. Its about where you want to go back to work”.

Consumer taking on more debt than ever…more ‘pay later’, yet he is confident in the future with a “little turbulence”.

What's next for him? He is looking to build more resorts and adding more residential into existing retail portfolios. Check out his current portfolio here. 

Weitz Take: 

It's hard for me to reconcile the idea that 1) the office bottom is not in; 2) we face turbulence ahead, along with 3) confidence in the future. I suppose if none of those are on the same timeline, but you simply can't have all at the same time. If you are telling me the 'bottom is not in' then the banks funding those loans will eventually have to take loses, are probably hesitant to lend now or in the near future if they see huge potential loses ahead. Reading between the lines, I think Caruso feels like he has a great high-end niche (which seems to be true) which will fare well in any economy (perhaps a bit presumptive) and yet thinks the markets as a whole will suffer in the coming years.