Landmark Links April 2nd – Panhandling

I know that this seems trivial given the state of the world right now but I’d be remiss not to bring it up.  Reckless management and uncontrolled growth killed WeWork but coronavirus may ultimately bury the body.  Everyone’s favorite co-working cult is asking its landlords to help cut its rent bill by up to 30%.  This, of course puts landlords in the difficult position of having to decide between a massive reduction in revenue from one of their largest tenants and risking that tenant vacating altogether.  It’s not a good time to be a landlord with a lot of exposure to WeWork, but then again it hasn’t been good to be in that position for a long time.  Someone (points finger at self) called out this exact scenario back in 2018 when WeWork became Manhattan’s largest office occupier and it became clear that they posted a systemic risk to landlords in some markets.

Regardless of what happens, WeWork is screwed.  It was hemorrhaging cash before COVID and who in their right mind is going to renew or join in this environment (especially when they are refusing to give discounts to tenants who are sheltering at home)?  Also this:

As of June 30, WeWork had provided credit support in respect of leases in the form of corporate guarantees of $4.5 billion. The company had $4.4 billion in cash as of Dec. 31.

Bye Felicia

What I’m Reading: 

Over the Hill: Senor housing operators were facing massive pressures from a supply glut before the pandemic erupted.  Nothing that has transpired in the last month or so will help that situation.

At Your Service: Ginnie Mae, an agency within the HUD that guarantees more than $2 trillion worth of mortgage-backed securities, is using a pool of capital reserved for natural disasters to advance principal and interest payments to investors on behalf of servicers who are squeezed for cash thanks to widespread forbearance.

Between a Rock and a Hard Place: Real estate debt funds are stuck between their lenders, who are issuing margin calls and their borrowers, who are short on cash and can’t afford to pay the mortgage.

This Seems Bad: Norway’s sovereign debt fund – the largest in the world – is about to have to liquidate assets in order to cover government withdrawals for the first time ever, thanks to low oil prices and the market crash.

Signs of a Slowdown: Lumber prices are signaling that the new home market is fizzling, despite home builders’ push to keep residential construction going through the coronavirus crisis.  The one bright spot for mills is that demand for pulp – which is used to make toilet paper – is off the charts right now.

Drawdown: Companies are tapping their emergency credit lines in an effort to find enough cash to weather the coronavirus storm.

Red Light.  Green Light: There is a very real scenario where social distancing could be an on-and-off occurrence until a vaccine is developed.

Downward Spiral: Nexdoor was a cesspool that was apt to make one lose faith in humanity – especially in your own community – before coronavirus hit.  Full disclosure: I received an (apparently) lifetime ban about a couple of years ago for trolling.  As you can probably imagine, its gotten considerably worse over the course of the past month.

Chart of the Day


Source: Wall Street Journal


Seems Reasonable: A man who was shot after breaking into a home claimed that he did it because dinosaurs were chasing him because Florida.

Covidiot of the Day: A Missouri miscreant yesterday walked around a discount store and coughed “on the doors and into the air” before writing “COVID 19” in the condensation on a freezer door, police charge

Shooting Up the Charts: Stay the Fuck at Home is going the be the anthem of 2020 (h/t Scott Cameron)

Landmark Links – A candid look at the economy, real estate, and other things sometimes related.

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