Charlie Munger warns of bad loans in the US commercial property market

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Charlie Munger warns of stress in the US commercial property market with banks carrying a lot of bad loans as prices slump

to shield against loan losses, reflecting concerns about the health of commercial real-estate debt.

An analysis by debt-tracking firm Trepp of found the four largest US banks – Wells Fargo, JPMorgan Chase, Bank of America, and Citibank – collectively have $62.9 billion of such loss provisions. Meanwhile, experts have warned the banking crisis that erupted in March after the failures of Silicon Valley Bank and Signature Bank will, which continues to see high vacancy rates amid the work-from-home trend.

"A lot of real estate isn't so good anymore," Munger said."We have a lot of troubled office buildings, a lot of troubled shopping centers, a lot of troubled other properties. There's a lot of agony out there." Berkshire has supported US banks through periods of financial instability, the FT noted, such as its $5 billion investment in Goldman Sachs during the financial crisis in 2007-2008 and a similar amount in Bank of America in 2011. In the latest instance, JPMorgan will take over First Republic, which saw depositsFirst Republic, which catered to wealthy clients, was unable last week to piece together a private-sector rescue that would have avoided seizure by the FDIC.

 

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Charlie Munger reportedly warns of trouble for the U.S. commercial property marketCharlie Munger believes there is trouble ahead for the U.S. commercial property market.
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