As I Promised, EU Is Colliding Into Prac…

17-01-2017 Hits:356 BoomBustBlog Reggie Middleton

As I Promised, EU Is Colliding Into Practical Confines of NIRP, Bank Hemorrhaging Up Next

Nearly a year ago, I warned subscribers of consequences stemming from the ECB's negative interest rate program. Here's an exceprt from our resarch report titled European Banking Macro Issues for March...

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Is Bitcoin Too Risky? Whenever the Bitco…

12-01-2017 Hits:1129 BoomBustBlog Reggie Middleton

Is Bitcoin Too Risky? Whenever the Bitcoin is Mentioned in Financial Pop Media, Ignorance Ensues

I hate to be the one to break bad news to you, but most of the pop media/mainstream media financial pundits that I hear and see opine on bitcoin have...

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What Happens When Rates Rise While the S…

10-01-2017 Hits:621 BoomBustBlog Reggie Middleton

What Happens When Rates Rise While the S&P 500 Relies on Cheap Credit To Boost EPS?

So, the stock market, bond market and real estate markets are all at all-time highs. Everything is Awesome! You know better than that. You see, when the bond market wakes...

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Debt Encumbered Oil, Sovereign Soil, Toi…

10-01-2017 Hits:506 BoomBustBlog Reggie Middleton

Debt Encumbered Oil, Sovereign Soil, Toil & Trouble: Can't You Hear Seems Cracking in the OPEC Empire?

@WSJ reports Libya Ramping Up Oil Production, Threatening OPEC (supposed) Plans to lift global oil place by artificially limiting supply. This would be in violation of federal antii-trust laws in the...

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Ten Years Since BoomBustBlog Was 1st Pub…

09-01-2017 Hits:814 BoomBustBlog Reggie Middleton

Ten Years Since BoomBustBlog Was 1st Published & That Initial Research Still Relevant Today

We have looked into insurance companies' performance last month in regards to our bearish real estate thesis. A small comederie of companies are suffering losses and/or declining profits as we've exected....

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The Macro Truth About The Big Bitcoin Po…

07-01-2017 Hits:976 BoomBustBlog Reggie Middleton

Bitcoin has dropped precipitously, and as is usual, we have the cacophony of instant digital currency pundits cackling about as if they had a clue. This is the inaugural post...

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To Bust or Not To Bust: Are We In A Real…

04-01-2017 Hits:688 BoomBustBlog Reggie Middleton

To Bust or Not To Bust: Are We In A Real Estate Bubble?

Banks are showing thin NIM, yet many of the big banks are able to boast stable if not slightly improving credit metrics. This doesn’t make sense considering the explosive growth...

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What Happens To Real Asset Lending Banks…

03-01-2017 Hits:532 BoomBustBlog Reggie Middleton

What Happens To Real Asset Lending Banks When the Real Funding Rate Appears? We're About to Find Out

During the financial crisis of 2008, money market funds who subjectively agreed to hold their NAV (net asset value) unit prices at $1 “broke the buck”. That is, the unit...

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Stress Test on Banks’ Earnings Facing th…

30-06-2014 Hits:44635 BoomBustBlog Reggie Middleton

Stress Test on Banks’ Earnings Facing the Veritaseum UltraCoin Value Transaction Platform

My last post on the topic of disintermediation during a paradigm shift was Wall Street Should Be First To Invest In Reggie Middleton's UltraCoin, Much Of It Won't Be Here In...

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Introducing the "Unbreakable Promis…

09-06-2014 Hits:39468 BoomBustBlog Reggie Middleton

Introducing the "Unbreakable Promise" As a Method Increasing Efficiencies and Decreasing Risk

Continuing on the margin compression theme originally laid out in Margin Compression Is Coming in the Payment Processing Space As $100 Million Pours Into Startups, I illustrate mathematically how the bit...

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Bitcoin (and Apple) Mythbusting 101

04-06-2014 Hits:40374 BoomBustBlog Reggie Middleton

Bitcoin (and Apple) Mythbusting 101

Yesterday, I did a radio interview with Benzinga. In it I busted myths about Apple, Bitcoin and Coins in general (ABCs). Listen to the interview below and the info sheets...

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Bitcoin (and Apple) Mythbusting 101

04-06-2014 Hits:44977 BoomBustBlog Reggie Middleton

Bitcoin (and Apple) Mythbusting 101

Yesterday, I did a radio interview with Benzinga. In it I busted myths about Apple, Bitcoin and Coins in general (ABCs). Listen to the interview below and the info sheets...

Read more

My first post on my brand new blog about 6 momths ago started with a warning about the commercial real estate market and obscenely low cap rates. A� few months later I revisited the topic with a couple of anecdotal posts...


I then noticed how the mainstream media and blogs started to catch on...


Then I decided to share my proprietary research� on a particular REIT and its market...

  1. The Commercial Real Estate Crash Cometh, and I know who is leading the way!
  2. Generally Negative Growth in General Growth Properties - GGP Part II
  3. General Growth Properties & the Commercial Real Estate Crash, pt III - The Story Gets Worse
  4. More on GGP: A Granular View of Insider Selling and Lease Rate Growth
  5. GGP part 5 - The Comprehensive Analysis is finally here
  6. My Response to the GGP Press Release, which seems to respond to blogs...
  7. For those who were wondering what sparked that silly press release from GGP...
  8. GGP: Foreclosure vs Asset Sale
  9. GGP Refinancing Sensitvity Analysis
  10. GGP part 7 - Share value under the foreclosure analysis
  11. GGP part 8 - The Final Anaysis: fire sale of prime properties


It appears that now, the price movement in CRE and CMBS is unmistakeably negative. To begin with, it takes money to buy buildings and when you buy buildings you increase demand which drives prices up. This has happened fervently for the last four or five years, driving prices high and cap rates low. So, what happens when you can't find the money to buy the buildings anymore? I'm an equity/real estate guy, but I do look around and ask questions on the fixed income side every now and then.

�Below is a chart of� the AAA cmbs index. The spread is out to around +280. I am told that these are around a seven year duration security, with each 100 bps eqauting to about 7 points (very roughly). This index was +80 one year ago, and +280 is a loss of around 15 points off of par (100). �
Additionally this is the top of the heap in terms of quality.�



This is the A rated stuff.� This equates to $55 - $60 dollar price according to the bond traders. Think about it, and investment grade security losing that much of its value.

I looked at teh BBB and BB charts at and they look so steep as to be unreal.�

�The GGP links above in the beginning of this post are well researched and should make very clear where the underlying is headed. GGP is not the only REIT/investor in a bind. So who has this stuff on their books? See Bear Stearns, Morgan Stanley, Ambac and MBIA - to start with. In the case of Bear Stearns:

Deal Type Min Rating Total
CMBS A $227,477,273

AA $83,459,000

AAA $466,812,629

B $21,524,000

BB $80,214,000
� BBB $427,298,000
CMBS Total CMBS Total $1,306,784,902


This is not a comprehensive glimpse of BSCs holdings, only about 25% of it, as insured by the two major monolines. They also have a very large chunk of "unidentified" securities which I think sports a very significant contigent of CMBS derivatives.

Add this to their other real estate related holdings then apply the marks that you see in the charts above and you have quite a few billion dollars of writedowns coming down the pike...


�The actual underlying indexes are showing losses as well... From the MIT site.

�MIT's commercial property price index shows its second straight quarterly decline

Indicates seven percent drop in commercial property since summer

February 5, 2008

The value of U.S. commercial real estate owned by big pension funds fell another 5 percent in the fourth quarter of 2007, according to an index produced by the MIT Center for Real Estate.

The drop in the quarterly transaction-based index (TBI), which tracks the price at which big pension funds buy and sell properties like shopping malls, apartment complexes and office towers, was the second straight quarterly decline. It was deeper than the 2.5 percent drop in the third quarter, and it means the cumulative fall since last year's midsummer peak is now more than 7 percent.

"This is evidence that the commercial property market continued to fall, and at an accelerated rate, through the last quarter of 2007, no doubt due to the effects of the credit crunch," said MIT Center for Real Estate Director David Geltner.

The TBI, based on properties sold from the National Council of Real Estate Investment Fiduciaries (NCREIF) data base, grew 64 percent from 2004 through 2006, then had another 8 percent spurt in the first half of 2007. The decline in the second half of 2007 still leaves commercial property prices at their level of a year ago, a level that was considered historically high at the time.

"If this is as far as it goes, the price decline we see so far in commercial property as reflected in the TBI may simply represent a correction of the froth that occurred in early 2007 as a result of very aggressive commercial mortgage underwriting practices," said Geltner.

The TBI measure of total returns for the year 2007 was 3.7 percent, which simply reflected operating income, with prices basically unchanged. Despite the upsurge in the first half of the year, this was the poorest calendar year annual performance for the index since 1992, when commercial property experienced its worst crash since the Great Depression. Index Co-Director Henry Pollakowski was quick to point out, however, that fundamentals in the commercial property market are much stronger now than they were in 1992.

"We don't have the kind of over-building we had then, and building occupancies and rents are much stronger. Commercial mortgage default rates are much lower than in the early 1990s," Pollakowski said.
The MIT Center's TBI is based on prices of NCREIF properties sold each quarter from the property database that underlies the NCREIF Property Index (NPI), and also makes use of the appraisal information for all of the more than 5,000 NCREIF properties. Such an index--national, quarterly, transaction-based, and by property type--had not been previously constructed prior to MIT's development of it in 2006. NCREIF supported development of the index as a useful tool for research and decision-making in the industry.

While the NCREIF properties well represent institutional investments such as pension funds, a second index based on a broader population of properties was subsequently developed at the MIT Center for Real Estate. That index, now published by Moody's Investor Services as the Moody's/REAL Commercial Property Price Index, will release its 4th-quarter results later this month. While the TBI represents pension funds' sales, the Moody's/REAL Index represents the broader commercial property market and includes a monthly national commercial property index.