Mortgage Bankers Miss Profits


Where's Groucho when you need him?

Inquiring minds are thinking it sounds as if it is the beginning of a “A man walks into a bar…” joke. The WSJ’s article on the Mortgage Bankers’ Association selling their headquarters for a loss:

A year ago, in what seemed like a supreme irony, the Mortgage Bankers Association sold its Washington, D.C., headquarters at a big loss.

On Thursday, insult was added to injury: The building’s buyer has flipped it for a big profit.

The transaction shows how quickly the market for well-occupied and well-located office buildings has rebounded in some U.S. cities thanks to yield-chasing investors pouring cash into commercial property.

A German real-estate fund is buying the former Mortgage Bankers’ headquarters from real-estate data firm CoStar Group Inc. for $101 million, CoStar said Thursday. In February last year, CoStar paid $41.3 million for the building, which is located just blocks from the White House.

At the time, the trade group for mortgage lenders, like many of its members’ customers, was “under water”—owing more than the property was worth— on its $75 million mortgage for the 10-story, glass-walled building. The MBA purchased the building when it was under development in 2007 for $79 million.

Can Mortgage Bankers spell Irony?

So are the buyers back? It sure looks so:

To be sure, the deal doesn’t mean commercial real estate is back to normal. The delinquency rate for securities backed by commercial mortgages recently hit an all-time high of 9.34%, and the national vacancy rate for office buildings is at its highest in nearly 20 years. Property owners throughout most of the country are fighting with lenders over defaults and foreclosures.

But with all the problems in the economy they may not be buyers as much as dead cats bouncing.

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