Commerical Real Estate Problems - But Not on Wall Street

maguire properties defaultFeatured on the front page of Monday's Wall Street Journal was the announcement that Maguire Properties, downtown Los Angeles' biggest real estate owner, would be giving the keys back to seven of their high profile office buildings in LA and Orange county. Being head deep in the commercial real estate market, I knew of this news a while back and know of several other groups who will also do the same. Due to extreme pressures of the deep recession as well as increasing vacancies with lowering rental rates, Maguire could no longer afford to pay off the debt.

The article went on to say that essentially, Maguire was insolvent and they are finding themselves in heap of trouble. You would think after such a revealing day of their troubles, their stock would respond in a negative reaction. However, it was the opposite that happened. Yesterday, Maguire's stock price was up over 16% at one point. This just sums up the recent unorthodox movings of the stock market and that indeed it has recently had a mind of its own. Maguire stands as an early example of many to follow suit. Even with the stock market going up, consumer income still suffers as does corporate and retail earnings. As more time goes by, more and more landlords will have no other choice but to give the keys back. Many have tried already, but due to the amount of distressed properties, banks are selectively choosing the properties they are taking back at this point.

Today the market closed in the red having the Dow close down just under 100 points. This was a long overdue selling day that could spread depending on retail earnings this week. As of now, there has not been much action in my account, however, I continue to believe in the severe turn of this market. To think that indeed a full recovery could be here so quickly after almost a mass bank failure is ridiculous. Sooner or later, once again fundamentals will realign with market performance. Lets see if another round of profit taking kicks in tomorrow. Happy Trading.



    Wall street is the biggest racket in the world.