Charlie Munger reportedly warns of trouble for the U.S. commercial property market


Charles Munger at the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska, April 29, 2022.

David A. Grogan | CNBC

Charlie Munger believes there’s trouble forward for the U.S. commercial property market.

The 99-year-old investor informed the Financial Times that U.S. banks are full of “bad loans” that will likely be susceptible as “bad times come” and property costs fall.

“It’s not nearly as bad as it was in 2008,” he informed the Financial Times in an interview. “But trouble happens to banking just like trouble happens everywhere else.” 

Munger’s warning comes as U.S. regulators have requested banks for their greatest and closing takeover presents for First Republic by Sunday afternoon, the newest in what has been a tumultuous interval for midsized U.S. banks.

Since the failure of Silicon Valley Bank in March, consideration has turned to First Republic as the weakest hyperlink in the American banking system. Shares of the financial institution sank 90% final month after which collapsed additional this week after First Republic disclosed how dire its state of affairs is.

Berkshire Hathaway, the place Munger serves as vice chairman, has largely stayed on the fringe of the disaster regardless of its historical past of supporting American banks by occasions of turmoil. Munger, who can also be Warren Buffett’s longtime funding accomplice, instructed that Berkshire’s restraint is partially as a result of dangers that might emerge from banks’ quite a few commercial property loans.

“A lot of real estate isn’t so good anymore,” Munger mentioned. “We have a lot of troubled office buildings, a lot of troubled shopping centers, a lot of troubled other properties. There’s a lot of agony out there.”

Read the complete Financial Times interview here.

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