The Next Shoe

So what’s the next shoe to drop? In my opinion, it’s commercial mortgages.

Residential mortgages are loans you take to buy your home. Commercial mortgages are loans that a developer takes to buy a commercial building. Commercial real-estate is a lot different than residential property. For one thing, it’s tied a lot closer to the economy. For another, high-end marquis properties like big-city skyscrapers usually hold their value.

Until now. Recently Boston’s John Hancock Center went through a bankruptcy auction and sold for $660 million. That’s about half the value it went for 36 months earlier. In the mean time we’ve had an economic crunch in finance-a major part of Boston’s economy. That’s created vacancies in downtown office buildings, which has pushed down their value.

Add all this up and we’re not out of the woods yet. That’s what the market has been saying the past couple days. During the first quarter the banks proved that zero interest on deposits and 4% on loans means they can rake in earnings. Let’s hope they can earn enough to stay ahead of the curve.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2014-09-04T18:04:44+00:00 April 22nd, 2009|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
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