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I've warned on CRE several times over the last 4 months, in significant detail. The mainstream media seems to have picked up on the trend. I will try to keep my readers ahead of the curve on this, primarily by extending the posts linked at the bottom of this article. I will have detailed info in a few days on the short that I have been working on. In the meantime, from wsj.com:

"The credit crunch triggered by the downturn in the housing market is creating problems in commercial real estate, driving down prices of office buildings, shopping malls and apartment complexes, and leaving some owners scrambling for cash.

Centro had planned to pay off the short-term loans by selling long-term debt via the commercial mortgage-backed securities market, but the lack of buyers forced it to get a two-month extension from its creditors. Commercial mortgage-backed securities, or CMBS, are pools of loans that are sliced up and sold to investors as bonds.

In another high-profile case, the clock is ticking for Harry Macklowe, the New York developer, who is struggling to raise financing by February to replace $7.1 billion in short-term money he borrowed to finance his heavily leveraged acquisition of seven Manhattan office buildings this year.

The predicament facing Centro, Mr. Macklowe and numerous others underscores the state of the once-unflappable commercial real-estate market. For the past few months, the sector has been in a state of near-paralysis, as financing has nearly dried up. The number of major properties sold is down by half, and many worry that the market will continue to deteriorate as property sales remain slow, prices continue to drop and deals keep falling apart."

This is just a heads up given the trends mention in September, November and earlier this month, namely:

• Do you remember when I said Commercial Real E...
• Will the commercial real estate market fall? ...

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written by Alan de Chezet, January 12, 2008

Mr. Middleton:

A regular reader of "Seeking Alpha," I appreciate the clarity of your thinking and the depth of your research. I have bought and sold SRS at a gain in recent weeks, and have a new position at $128.00. I am expecting to see SRS test $150 near-term. Any thoughts? Too, I give you some of the credit for my shorting real estate, which, along with my financial short, has kept my portfolio from losing value in January.

When do you expect the real estate index to bottom out?

Opinions from others welcome.

Dechezet

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written by Reggie Middleton, January 12, 2008

Thanks for the kind words. I don't follow SRS. I also don't really believe in trying to call bottoms. I think it is a losing risk/reward bet. Instead of trying to call a bottom, I will let it come and ride it on the way back up, that is if it comes back up any time soon (many have historically optimistic expecations of asset prices). I am quite comfortable letting all of those crystal ball toting yahoos take the risk of trying to guess something that quite frankly can't be guessed. If they succeed, more power to them, they get the first 100 or so points of a 1200 point ride. For me, it just ain't worth it.

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