An abandonment of San Francisco commercial mortgages, the Fed presses the pause button and President Biden’s unlikely railroad idea. Looking into the wild and wooly world of real estate, here are our Hits and Misses for this week.
Miss: I Left My Mortgage in San Francisco. California has long been the birthplace of eccentric trends, and the latest involves financially health property owners intentionally defaulting on the commercial mortgages for their San Francisco buildings. This week, the Westfield retail mall group walked away from the mortgage on its iconic San Francisco Centre shopping plaza while Swift Real Estate Partners defaulted on the mortgage for a historic office building it acquired five years ago. Last week, Last week, real estate investment trust Park Hotels & Resorts defaulted on the loan for two of its San Francisco luxury hotels. Let’s hope this is one California trend that never finds its way to other major markets.
Hit: Mr. Powell and Mr. Yun. This week, the Federal Reserve finally hit the brakes – if only temporarily – on its strategy of jacking up interest rates. While Fed Chairman Jerome Powell hinted that at least two more hikes could occur this year, let’s hope that Powell and his central bank gang listen to National Association of Realtors Chief Economic Lawrence Yun, who challenged the Fed’s logic by stating, “There is no need to consider raising interest rates. In fact, considering the balance sheet difficulties faced by community banks and weakness in the commercial real estate sector, the Fed should look at cutting interest rates before the end of the year. The Fed should look forward, not backward.”
Miss: The Train Left the Station. For West Coast and Hawaiian developers, having a property along the Pacific Ocean is a location coup. But thanks to President Biden, the Pacific has become a transit-oriented district. In a speech on Wednesday night before the League of Conservation Voters, the president detoured from his large-type notecards and declared: “We have plans to build a railroad from the Pacific all the way across the Indian Ocean.” Biden made a similar comment last week during a press conference with U.K. Prime Minister Rishi Sunak, statement: “We’re talking about building — and I had my team putting together with other countries as well — to build a railroad from the Pacific Ocean — from the Atlantic Ocean all the way to the Indian Ocean.” Yeah, but which half of the ocean is going to be the wrong side of the tracks?
Hit: Fighting the Good Fight. Kudos to the National Fair Housing Alliance (NFHA) for calling on Congress and the Biden administration to restore fair housing spending levels that were jettisoned in the recently completed federal debt ceiling agreement. NFHA Executive Vice President Nikitra Bailey noted the agreement “rescinds $3.3 million in budget authority to the Department of Housing and Urban Development (HUD) that had previously been set aside for local fair housing enforcement agencies as part of the American Rescue Plan Act. This is deeply troubling.” Indeed, it is, and here is hoping Bailey and the NFHA’s supporters hold both sides of Pennsylvania Avenue accountable.
Miss: A Royal Rumpus. Evictions can be messy, but the eviction process has taken on a comic opera dimension in Great Britain as King Charles III is reportedly running into problems removing his scandal-plagued brother Prince Andrew from the 30-room mansion Royal Lodge. The siblings’ mother, the late Queen Elizabeth II, gave Andrew the mansion with a 75-year lease, but Charles would like to see the property transferred to his son and heir, Prince William, and his family. Charles reportedly offered Andrew Frogmore House, a considerably smaller home that was briefly the residence of Prince Harry and Meghan Markle – Andrew loaned that residence to one of his daughters and is supposedly refusing to leave the grounds of Royal Lodge out of fear that Charles will have him barred from re-entering. Oh, and Andrew is living in Royal Lodge with Sarah Ferguson, from whom he’s been divorced since 1996. To borrow a line from Katharine Hepburn’s Queen Eleanor of Aquitaine in the classic film “The Lion in Winter”: What family doesn’t have its ups and downs?
Photo of President Biden by Gage Skidmore / Flickr Creative Commons
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