Metlife Drops as Commercial Mortgage Defaults Loom
MetLife Inc. and Prudential Financial Inc., the largest U.S. life insurers, declined in New York trading on concern that losses on commercial mortgages will surge as the recession deepens.
The industry, which puts about 10 percent of its invested assets in commercial mortgages, may see losses rise to the highest levels since the early 1990s.
Commercial mortgage defaults are “certainly on the forefront of the radar screen."
The Commercial Real Estate is overleveraged. There is rampant overcapacity in restaurants, furniture stores, appliance stores, nail salons, clothing stores, and anything else you can think of. The way to solve it if for a wave of bankruptcies to shake out the weak.
As retail sales shrank on record, more and more retailers are going to close stores, file bankruptcies. Mall owners need to reduce the rents to prevent losing leases, vacancies are going to soar, empty malls with no tenants will file bankruptcy, all these definitely won't help the commercial real estate market.
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