Thread regarding Wells Fargo & Co. layoffs

@1gus+1lZM1tRl

Wouldn’t large apartment buildings and food/entertainment venues still count as commercial real estate though? It’s not as if lending for commercial development will go away entirely, and CMBS can still be a money-maker, they just need to shift whatever proportion of the current market is focused on corporate office spaces into other types of commercial development instead. If that means the overall size of this market will be reduced, then all the more reason to get started on that pivot to maximize our eventual share of the smaller pie. Sure we could get hurt if pre-pandemic loans we still have on the books fail, but in that case facilitating new office development just gives our lendees even more competition for a tenant market that’s inevitably going to shrink.

It's pretty funny that leadership wants to get out of home mortgage, even though people will always want a place to live, but want to remain in commercial real estate which is doomed to face significant hurdles in the coming decades as more and more work becomes remote due to economic necessity. What's happening right now, the big push to RTO, is a combination of the death throws of the commercial real estate market and political influence on corporate America.

As far as the article goes, it falls into a familiar trap, using an example of colocated employees. If your not colocated the entire justification falls apart. The question in the next decade is not whether we will collaborate digitally, but how to do it well. Those that can't as a basic skill will be less valuable employees. It'll be a task that just about everyone needs, like reading or being able to use a computer. Executives with the vision to embrace WFH to save costs will reap the rewards.

Hey @1sze+1lZM1tRl here is an article that explains how the lending cycle gets more complicated in a rapidly rising interest rate environment.

https://ca.finance.yahoo.com/news/rising-rates-exposing-weak-spots-100019610.html

Something like Commercial mortgage-backed securities (CMBS) and "cap rate". The article says that most of the paper is owned by regionals. It has a "banks are going to suffer".
I am not in this area but would guess Wells puts all these loans together into CMBS. At one time (2015) they were on the top of the list of commercial loan servicers. https://www.worldpropertyjournal.com/real-estate-news/united-states/commercial-loan-servicers-multifamily-loan-servicers-wells-fargo-pnc-real-estatemidland-loan-services-berkadia-commercial-mortgage-keybank-gemsa-loan-services-8831.php

I agree with @ggf+1lZM1tRl that "management" should give us some numbers. But based on my experience either "management" doesn't want to know or knows but scarred sh--t--less about the falling "cap rates" and doesn't want you to know.
Question will there be a crisis, a banking contagion due to wfh/rto?
one can look at Blackstone's Reit BREIT .... shades of the next banking crisis?

@1sze Basically, we're all wage slaves because the US economy is still dependent on a form of colonialism that is enforced by corporations rather than the government and people.

@1sze+1lZM1tRl

This makes sense and is more or less what most people have in mind when they surmise there are ulterior motives to RTO. But then why can’t leadership just come out and say that?

Also I hope they’re taking the opportunity to get out of issuing new such loans. Forced RTO can’t artificially inflate the demand for commercial real estate for ever. Eventually the lack of true business need will win out in the industries/companies where that’s the case, and companies will start ditching offices to gain a competitive advantage on overhead costs and talent acquisition. If anything the next big thing may be loans to help former office buildings convert to residential. I’ve heard there’s currently a 22k rental unit shortage in CLT compared to demand. The uptown buildings WFC currently occupies alone could relieve a big chunk of that if converted to high rise apartments.

Trying to find a number of commercial real estate foreclosures -- something like Black Knight does for homes... Here is a site of bank owned properties for sale/lease https://www.loopnet.com/bank-owned-properties-for-sale/

I hope someone with more commercial bank experience fills us in. This is the way I see it.
Let's say Company1 is looking to purchase an office building for your business. The building is priced at $1 million, and you have $200,000 saved up for a down payment. You approach a bank to request a loan for the remaining $800,000.
After reviewing your financial history and the details of the property, the bank agrees to provide a commercial real estate loan for the full $800,000. The loan terms include a 5% interest rate and a 15-year term.

The bank funds the loan by creating a new debt instrument in the form of a promissory note. This note outlines the terms of the loan, including the interest rate, repayment schedule, and any other terms and conditions. The bank then files a mortgage or deed of trust with the local government to secure the loan against the property.

Each month, Company1 makes payments on the loan, which include both principal and interest. As you make payments, the principal balance of the loan decreases, and the interest charges decrease accordingly. At the end of the 15-year term, you'll have fully paid off the loan and own the office building free and clear.

In exchange for providing the loan, the bank earns interest on the loan balance over the course of the 15-year term. This interest serves as the bank's profit for providing the loan. The bank also has the right to foreclose on the property and sell it to recover its investment if you default on the loan.
okay, that's banking 101. Now what if your Company1 has employees that don't want to RTO. They tell the execs at Company1 that they don't need this property. So you either default on the loan or sell it to another company, a reit, or auction it {?}. Now the market after wfh/covid is a whole lot different now. It's hard to get the same rents. Everyone wants to stay home. They all start getting out -- forcing you to default on the loan. If Company1 forecloses the bank has to auction/sell the property. I don't think the bank comes out good in either case. It is best for the bank to support companies keeping their building (offices). Banks need to set an example or else face the unzippering of all the commercial real estate loans due to RTO.

@ggf+1lZM1tRl - Best analogy I've seen yet!!!
"For a lot of people, being in office 3 days per week makes barely any more sense than a directive that required me to send 3/5 of my written communications via inter-office snail-mail or fax machine would."
"

Gee, I wonder why Bloomberg would want people to return to their offices. Let me just see how much their NYC rent is on wikipedia... "Bloomberg pays Alexander's, the owner of the building, $105 million in annual rent."

Oh, i see.

@cez trying to save the company money is insubordination now. That checks out.

I've been posting here a while. and when your interviewing and they ask you why you are looking tell them you were laid off. they don't need to know you were fired for insubordination

I see Charlie's pet is posting here now. Welcome!!!

I’ve always thought the commercial real estate collapse, as well as supporting businesses (coffee shops, lunch spots, various supporting service businesses), with WFC holding the loans, is the primary reason for RTO. I am an adult, and I expect this company to level with me on the reasoning, whether I agree or not.

bring out the stick to ban RTO for climate reasons.
bring out the stick to cancel H1, OPT, L1 visa programs and outsourcing.

Please grant us our wish, people are suffering every day.

The article here makes the key point that management never quotes any hard numbers in their arguments to force people to RTO. If they just presented whatever data (if it exists) to present the justified business need for company-wide RTO, people might disagree but at least they wouldn’t feel infantilized. Instead we just get platitudes about “collaboration” that the many employees who aren’t collocated with most of the people they work with day-to-day will never buy into. It makes it seem like the sole reason for RTO is because upper-management are a bunch of dinosaurs who can’t imagine things ever operating differently than “the way they’ve always been.” For a lot of people, being in office 3 days per week makes barely any more sense than a directive that required me to send 3/5 of my written communications via inter-office snail-mail or fax machine would. So they’re afraid a collapse of the commercial real estate industry will hurt the bank and they don’t want Wells to be the first domino? TELL US THAT THEN. Publish the numbers. Stop treating employees like children who need to be fed some simple myth as a justification for a rule that is actually necessary due to more complex realities.

I'm so afraid of having to explain to an interview that I was terminated as a decade long performing employee because I refused to drive to an office and be less productive. That's what keeps me up at night.

The year it'll take to performance management me out is the same as my severance would be.

Bring it.

100k+ in layoff benefits can be saved by termination. LOL

Fu-k RTO