[surfsvammel]

Is this correct? I’m guessing you are taking about the US, right? In the country where I live, those types of properties are normally owned by companies that specialise in owning and letting out spaces.

Often the companies buy property themselves, to use (since rents have been so high in he last decade or so). I don’t think banks are over-represented as owners, at least where I live. But I might be wrong.

Why is it that US banks are owning so much commercial real estate?

[cypherpunks01]

Commenter probably means that banks have massive exposure to CRE, primarily through mortgages they lent on.

[gerad]

It’s bad business to tie up that much capital in an asset, so you borrow to buy it. Banks are the folks who loan you the money to do so. Works great when the asset price goes up, and/or the rent from leasing out the space can cover the mortgage payments. It isn’t looking so great when asset prices are depressed and buildings are empty (like they are now).

[phendrenad2]

Those companies don't own the buildings, they bought them on credit, just like everyone else.

[wolpoli]

These companies do actually own the buildings based on the normal definition of own. The fact there are loans on the buildings does not change that.

[phendrenad2]

You're right, but the normal definition of building ownership is a bit weird. Can the company do anything it wants to the building without consulting the bank?

[wolpoli]

Well, there are some restrictions on what the bank might not allow the owner to do and that might be where the confusion lies.

[ddorian43]

Banks get the property when you cant pay the mortgage.

[mistrial9]

banks do not want to own commercial property. The only time I saw this up close was a business I knew in detail, got foreclosed. The attorneys involved sought, confirmed and signed the new owners, all before they started the foreclosure. No one wanted to hold the empty commercial property for even a week.

[short_sells_poo]

Most of these CRE holding companies acquire their inventory on leverage- they borrowed money to gobble up properties while money was cheap. Those loans have to come somewhere, and often (mostly?) it was banks.

If the holding company can't rent out the property, at some point they stop being able to service the debt. This leaves the banks with a lot of illiquid assets and bad debt...