Moody's plans to review credit ratings on $302.6 billion in commercial mortgage-backed securities because of increasing delinquency on commercial mortgages and declining market values for the underlying properties. Securities with the highest ratings, amounting to about 72% of the total amount getting reviewed, should not be affected, Moody's said.
U.S. nonfarm payrolls fell by 598,000 in January, the biggest decline since December 1974. The unemployment rate jumped 0.4 percentage point to 7.6%. Since the recession began in December 2007, 3.6 million
workers have lost their jobs.
General Growth Properties, Kite Realty Group Trust and Macerich are all lowering rents as vacancy rates rise. One of the biggest problems for mall owners is co-tenancy clauses, which allow other retailers to lower rent payments when a big neighbor leaves a location.
Apartment REITs saw their shares fall Thursday as weak forecasts pegged to lower job growth were released. "It is jobs that are the single most important determinant to the health of the multifamily industry, and today's jobless claim data is further evidence of just how bad the job picture currently is," said David Neithercut, CEO of Equity Residential.
The U.S. government is looking into ways to convert its bank holdings, which have generally been preferred shares, into convertible preferred shares, which could gradually be converted into common shares. The move would help give banks additional common equity when they need it to cover losses without the government owning a bigger stake than necessary.