What I’m Reading
End of the Line: The window for banks to use troubled debt restructuring (TDR) is coming to an end. TDRs have been a way for lenders to modify a loan’s terms, because of a borrower’s financial or legal difficulties, and account for an impairment of value. Under the initial CARES Act, that requirement was temporarily postponed as part of pandemic relief so that financial institutions didn’t have balance sheet shock, which would have affected their ability, or willingness, to lend. Lenders will now be required to take write downs, call for additional paydowns or sell loans at a loss, which they hadn’t been required to do during the pandemic. Globe Street FWIW, I doubt that this will result in much distressed opportunity outside of a relatively narrow segment of the hospitality space and some already-troubled malls.
Draw Down: Major droughts are driving expanded exploration for underground water but the West’s major aquifers are in trouble, too. The Atlantic See Also: How major western cities are managing water scarcity. Bloomberg
Blast Off: The expensive California housing market continued to get more pricey in 2021. With the slow pace of construction, demand looks poised to outpace supply in 2022 despite slowing population growth. NY Times
Mean Reversion: Millennials are now spending on housing exactly the same way that prior generations did – just delayed by a few years. Imagine that. Bloomberg
Narrow Focus: Distress never really materialized in 2021. However, lenders are increasingly narrowing their focus to a select few strongly-performing market segments. Bisnow
Chart of the Day
Homebuilders only want one thing and its that sweet levered beta.
Source: John Burns Real Estate Consulting
WTF
Out of Jail Free Card: In an apparent bid to dodge a criminal court date, a Connecticut man allegedly faked a positive COVID-19 test. The Smoking Gun
Wasn’t Me: A man who was arrested for DUI claimed that bags of cocaine and meth found wrapped around his penis during a pat-down were not his because Florida. Orlando Weekly
Basis Points – A candid look at the economy, real estate, and other things sometimes related.
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