The great American frontier, Williston, North Dakota, where young men traveled far and wide to seek out riches, is now on the other side of Mt. Prosperity.
Property tied to the greatness of American oil production is now completely and entirely distressed.
The rating company said that the debt, which has been put on its watch list in the past 24 months, represents more than a third of almost $340 million of commercial mortgage-backed securities tied to the shale hubs of North Dakota. The loans, created in 2013 and 2014, “have run into trouble as the slump in oil prices weighs on demand for commercial real estate in the oil and gas patch hubs of North Dakota,” Morningstar said in a report issued Wednesday.
The Williston area of North Dakota commanded some of the highest apartment rents in the country when oil prices were booming, drawing investment in new buildings to accommodate an influx of workers since 2006. The reversal in oil prices has prompted tens of thousands of job cuts, hurting demand for housing and other real estate in energy hubs such as Williston, Houston and Calgary.
The four largest North Dakota loans on Morningstar’s watch list are in special servicing, the company said. It forecast combined losses of about $16.5 million should three of those loans be liquidated. The three were used to finance the Strata Estate Suites apartment complexes in Watford City and nearby Williston, the Value Place Williston hotel and the Roosevelt East Apartments in Williston.
I had a client whose parent owned thousands of acres of worthless land up there for decades. Back in 2006, they were offered and accepted $40 million to lease it. That property would be worthless today.
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Haha. 16.5 million. Who cares. Creates opportunity for someone to buy it cheap. You’ve gone full zero hedge
Maybe you missed this part
The rating company said that the debt, which has been put on its watch list in the past 24 months, represents more than a third of almost $340 million of commercial mortgage-backed securities tied to the shale hubs of North Dakota
More like $125 mill. Have fun trying to make money in 2016
125 million. Still who cares. That’s literally chump change. Creates opportunity. Booms and busts have gone on in every market on earth for thousands of years. Some dickheads went full retard and overpaid for real estate in North Dakota basing it on $100 oil boom times forever. Who cares. Someone will step in when the time is right and buy it for 20 cents on the dollar and make a killing.
Wow, trash man. You aren’t seeing the forest through the trees.
That’s 1/3rd of all commercial debt there. This is one small little area.
Enjoy
I do indeed see the forest through the trees. You however are making 1000 acres of trees out to be the amazon. When the time is right someone will step in and buy. In 09 the smart people stepped in and bought up distressed real estate when panic was in the air. At a certain price everything is a good investment. Who gives a shit if some assholes were late to the party and overpaid in “2013 and 2014” for properties in oil boom towns and some bankers used recent comps and current rental rates to approve the loans. The smart people bought this shit in 09 sold to these assholes 2 years ago and will buy it back next year for 09 prices. We all realize oil and gas industry is pretty much screwed for an unknown period of time but there will be opportunity and there are always people to take advantage.
Ok, how about this?
$500 BILLION IN DISTRESSED DEBT BEING MARKED DOWN.
The commercial re tied to the assets of the oil is only an ancillary draw down.
There will be no buyers.